<PAGE>
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                    For the quarter ended September 30, 2001

                                       or

                TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

         For the transition period from ____________ to ________________

                        Commission File Number: 000-30211

                                MINDFULEYE, INC.
                            (FORMERLY, RABATCO, INC.)
        (Exact name of small business issuer as specified in its charter)

           NEVADA                                               87-0616344
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                              Identification No.)


         SUITE 300- 355 BURRARD ST. VANCOUVER, BRITISH COLUMBIA V6C 2G6
                     (Address of principal executive office)

                                  604-638-6800
                           (Issuer's telephone number)

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


                      APPLICABLE ONLY TO CORPORATE ISSUERS

Number of Shares of Common Stock, $0.001 Par Value, Outstanding at September 30,
2001: 20,687,744


Transitional Small Business Disclosure Format: Yes |_| No |X|
<PAGE>
                                MINDFULEYE, INC.
                              FOR THE QUARTER ENDED
                               SEPTEMBER 30, 2001

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                           Page
                                                                          Number
<S>                                                                       <C>
         Special Note Regarding Forward Looking Information ...........       3

                         PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements .........................................       4
Item 2.  Management's Discussion and Analysis of Financial Condition
              and Results of Operations................................      20

                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings.............................................      26
Item 2.  Changes in Securities and Use of Proceeds.....................      26
Item 3.  Defaults Upon Senior Securities...............................      26
Item 4.  Submission of Matters to a Vote of Security Holders...........      26
Item 5.  Other Information.............................................      26
Item 6.  Exhibits and Reports on Form 8-K..............................      27
</TABLE>


                                      -2-
<PAGE>
                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS


         To the extent that the information presented in this Quarterly Report
on Form 10-QSB for the quarter ended September 30, 2001 discusses financial
projections, information or expectations about our products or markets, or
otherwise makes statements about future events, such statements are
forward-looking. We are making these forward-looking statements in reliance on
the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Although we believe that the expectations reflected in these
forward-looking statements are based on reasonable assumptions, there are a
number of risks and uncertainties that could cause actual results to differ
materially from such forward-looking statements. These risks and uncertainties
are described, among other places in this Quarterly Report, in "Management's
Discussion and Analysis of Financial Condition and Results of Operations".

         In addition, we disclaim any obligations to update any forward-looking
statements to reflect events or circumstances after the date of this Quarterly
Report. When considering such forward-looking statements, you should keep in
mind the risks referenced above and the other cautionary statements in this
Quarterly Report.


                                      -3-
<PAGE>
                                MINDFULEYE, INC.
                          (A development stage company)

                        Consolidated Financial Statements
                      (Expressed in United States Dollars)
                               September 30, 2001
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                            PAGE
<S>                                                                         <C>
PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Report of Independent Accountants.............................................5
Consolidated Balance Sheet as of September 30, 2001
  and for year ended December 31, 2000........................................6
Consolidated Statements of Operations for the three and nine months ended
  September 30, 2001 and 2000 and from July 21, 1999 to September 30, 2001....7
Consolidated Statements of Cash Flows for the nine months ended
  September 30, 2001 and 2000 and from July 21, 1999 to September 30, 2001....8
Consolidated Statements of Stockholder Equity.................................9
Notes to Financial Statements................................................11
</TABLE>


                                      -4-
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS


TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF

MINDFULEYE, INC.
(A development stage company)


We have reviewed the accompanying consolidated balance sheet of MINDFULEYE, INC.
("the Company") as of September 30, 2001, the related consolidated statements of
stockholders' equity for the nine-month period then ended, and the consolidated
statements of operations and cash flows for the three-month and the nine-month
periods then ended and the cumulative period from July 21, 1999 (commencement)
to September 30, 2001. The financial statements for the year ended December 31,
2000 and prior periods were reported on by the previous independent accountants.
These consolidated financial statements are the responsibility of the Company's
management.

We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.

Based on our review, nothing has come to our attention that causes us to believe
that the accompanying consolidated financial statements are not, in all material
respects, in accordance with United States generally accepted accounting
principles.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company has suffered recurring losses
from operations and negative cash flows from operations that raise substantial
doubt about its ability to continue as a going concern. Management's plans in
regard to these matters are also described in Note 2. These consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.


Vancouver, B.C., Canada                           "ELLIS FOSTER"
November 9, 2001                               Chartered Accountants


                                      -5-
<PAGE>
MINDFULEYE, INC.
(A development stage company)

Consolidated Balance Sheets
(Expressed in United States Dollars)
(Unaudited)

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
                                                                                                 September 30,        December 31,
                                                                                                          2001                2000
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                             <C>                  <C>
ASSETS

CURRENT
  Cash and cash equivalents                                                                     $       72,397       $     345,897
  Accounts receivable                                                                                   26,766              11,906
  Prepaid expenses                                                                                      15,698               7,808
----------------------------------------------------------------------------------------------------------------------------------
                                                                                                       114,861             365,611

CAPITAL (note 5)                                                                                       189,856             239,848
----------------------------------------------------------------------------------------------------------------------------------
                                                                                                $      304,717       $     605,459
==================================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT
  Accounts payable and accrued liabilities                                                      $      344,726       $      67,949
  Deferred revenue                                                                                      59,358                   -
  Promissory note payable (note 6)                                                                     490,000                   -
----------------------------------------------------------------------------------------------------------------------------------
                                                                                                       894,084              67,949
----------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY

CAPITAL STOCK (note 8)
  Authorized
           100,000,000 common shares with a par value of $0.001

  Issued and outstanding
            20,687,744  common shares (2000 - 13,815,000)                                               20,688              14,415

ADDITIONAL PAID-IN CAPITAL                                                                           2,646,220           2,472,764
DEFICIT ACCUMULATED DURING THE DEVELOPMENT STAGE                                                    (3,256,275)         (1,949,669)
----------------------------------------------------------------------------------------------------------------------------------
                                                                                                      (589,367)            537,510
----------------------------------------------------------------------------------------------------------------------------------
HISTORY AND ORGANIZATION OF THE COMPANY (note 1)
COMMITMENTS (note 13)
SUBSEQUENT EVENTS (note 15)                                                                     $      304,717       $     605,459
==================================================================================================================================
APPROVED BY THE DIRECTORS     "Todd Cusolle"     "Scott Kerr"
                               --------------    ------------
                               Todd Cusolle       Scott Kerr
==================================================================================================================================
</TABLE>


                                       -6-
<PAGE>
MINDFULEYE, INC.
(A development stage company)

Consolidated Statement of Operations
(Expressed in United States Dollars)
(Unaudited)

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
                                               Cumulative
                                             Amounts from
                                                 July 21,
                                                     1999
                                                 (Date of      Three Month        Three Month       Nine Month         Nine Month
                                           Incorporation)     Period Ended       Period Ended     Period Ended       Period Ended
                                             to Sept. 30,         Sept. 30           Sept. 30        Sept. 30,          Sept. 30,
                                                     2001             2001               2000             2001               2000
----------------------------------------------------------------------------------------------------------------------------------
<S>                                      <C>               <C>               <C>               <C>               <C>
REVENUE                                  $         82,649  $        62,328   $              -  $        82,649   $              -
----------------------------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES
  Amortization                                     91,769           16,664              9,730           49,992             27,776
  Consulting fees                                 400,622           17,252            128,760           41,877            207,271
  Contract work                                     1,279                -                  -                -                  -
  Foreign exchange loss (gain)                      8,930          (6,300)              2,987            (591)              2,535
  Insurance                                        38,336            8,698                336           25,603                963
  Interest and bank charges                        35,691           12,909                584           23,833              7,235
  Investor relations                              103,709              248              3,760           56,279              4,088
  Legal and audit fees                            259,148            3,428             29,596           77,197            147,241
  Marketing and brand development                 179,868            (725)             48,628           23,225             98,003
  Merger costs                                    291,418           92,682                  -          291,418                  -
  Newsalert and other infeed service               77,044           10,372             10,798           38,085             27,684
  Office and miscellaneous                        169,529            7,560             32,430           36,789             84,669
  Rent and utilities                              151,511           22,751             16,210           69,226             52,296
  Stock based compensation expense                208,494                -                  -          102,200            103,850
  Telephone and communications                     74,727            6,298             13,726           21,826             31,835
  Wages and benefits                            1,289,206           60,616            180,768          534,736            466,867
----------------------------------------------------------------------------------------------------------------------------------
                                                3,381,281          252,453            478,313        1,391,695          1,262,313
----------------------------------------------------------------------------------------------------------------------------------
LOSS BEFORE OTHER ITEM                         (3,298,632)        (190,125)          (478,313)      (1,309,046)        (1,262,313)

OTHER ITEM
  Interest income                                  42,357               35             11,618            2,440             33,933
----------------------------------------------------------------------------------------------------------------------------------
LOSS FOR THE PERIOD                      $     (3,256,275) $      (190,090)  $       (466,695) $    (1,306,606)  $     (1,228,380)
==================================================================================================================================

BASIC AND DILUTED LOSS PER SHARE                           $         (0.01)  $          (0.03) $         (0.08)  $          (0.10)
==================================================================================================================================

SHARES USED IN BASIC AND DILUTED LOSS                           17,659,048         13,815,000       17,082,448         12,128,315
PER SHARE CALCULATIONS
==================================================================================================================================
</TABLE>


                                      -7-
<PAGE>
MINDFULEYE, INC.
(A development stage company)

Consolidated Statement of Cash Flows
(Expressed in United States Dollars)
(Unaudited)

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                                                Cumulative
                                                                              Amounts from
                                                                                  July 21,
                                                                                      1999
                                                                                  (Date of        Nine Month             Nine Month
                                                                            Incorporation)         Period Ended        Period Ended
                                                                              to Sept. 30,            Sept. 30,            Sept. 30
                                                                                      2001                 2001                2000
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>                   <C>                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Loss for the period                                                  $        (3,256,275)  $       (1,306,606)  $      (1,228,380)
  Items not affecting cash:
    Amortization                                                                    91,769               49,992              27,776
    Stock based compensation expense                                               208,494              102,200             103,850

  Changes in non-cash working capital items
    Increase in accounts receivable                                                (26,766)             (14,860)            (31,186)
    Increase in prepaid expenses                                                   (15,698)              (7,890)             (7,772)
    Increase in due to related parties                                                   -                    -             (23,116)
    Increase in accounts payable and accrued liabilities                           341,226              276,777              14,558
    Increase in deferred revenue                                                    59,358               59,358                   -
------------------------------------------------------------------------------------------------------------------------------------
                                                                                (2,597,892)            (841,029)         (1,144,270)
------------------------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES
  Acquisition of capital assets                                                   (281,625)                   -            (252,787)
  Cash acquired on acquisition of subsidiary                                     2,257,500                    -           2,257,500
------------------------------------------------------------------------------------------------------------------------------------
                                                                                 1,975,875                    -           2,004,713
------------------------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from issuance of common stock                                           377,530               77,529                   -
  Due to related parties                                                          (173,116)                   -            (150,000)
  Advance (repayment) of promissory note                                           490,000              490,000            (214,093)
------------------------------------------------------------------------------------------------------------------------------------
                                                                                   694,414              567,529            (364,093)
------------------------------------------------------------------------------------------------------------------------------------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS FOR THE PERIOD                     72,397             (273,500)            469,350

CASH AND CASH EQUIVALENTS, beginning of period                                           -              345,897               6,520
------------------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, end of period                               $            72,397   $           72,397   $         502,870
====================================================================================================================================
</TABLE>

SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS (note 11)


                                      -8-
<PAGE>
MINDFULEYE, INC.
(A development stage company)

Consolidated Statement of Shareholders' Equity
(Expressed in United States Dollars)
(Unaudited)                                                          Page 1 of 2

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                         Deficit
                                                                                                     Accumulated
                                                                                  Additional          During the              Total
                                                  Number                             Paid-In         Development      Shareholders'
                                               of Shares            Amount           Capital               Stage             Equity
------------------------------------------------------------------------------------------------------------------------------------
<S>                                            <C>              <C>              <C>               <C>                <C>
BALANCE, July 21, 1999                                 -        $        -       $         -       $           -      $           -

  Common stock issued                                160                 1                 -                   -                  1

  Loss for the period                                  -                 -                 -            (200,991)          (200,991)
------------------------------------------------------------------------------------------------------------------------------------

BALANCE, December 31, 1999                           160                 1                 -            (200,991)          (200,990)

  Common stock issued                                 53                 -                 -                   -                  -
------------------------------------------------------------------------------------------------------------------------------------

BALANCE, March 13, 2000                              213                 1                 -            (200,991)          (200,990)

  Capital stock of MindfulEye.com
    at March 13, 2000                               (213)               (1)                1                   -                  -

  Capital stock of MindfulEye, Inc.
    at March 13, 2000                          6,905,000                 -                 -                   -                  -

  Shares issued to acquire
  MindfulEye.com                               6,910,000             6,910         2,073,974                   -          2,080,884

  Adjustment to par value                              -             6,905            (6,905)                  -                  -

  Common stock issued
    November 1, 2000
    $0.50 per share                              300,000               300           149,700                   -            150,000

  Common stock issued
    November 12, 2000
    $0.50 per share                              300,000               300           149,700                   -            150,000

  Stock based
    compensation expense                               -                 -           106,294                   -            106,294

  Loss for the year 2000                               -                 -                 -          (1,748,678)        (1,748,678)
------------------------------------------------------------------------------------------------------------------------------------

BALANCE, December 31, 2000                    14,415,000            14,415         2,472,764          (1,949,669)           537,510
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                      -9-
<PAGE>
MINDFULEYE, INC.
(A development stage company)

Consolidated Statement of Shareholders' Equity
(Expressed in United States Dollars)
(Unaudited)                                                          Page 2 of 2

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                         Deficit
                                                                                                     Accumulated
                                                                                  Additional          During the              Total
                                                  Number                             Paid-In         Development      Shareholders'
                                               of Shares            Amount           Capital               Stage             Equity
------------------------------------------------------------------------------------------------------------------------------------
<S>                                           <C>                <C>             <C>              <C>              <C>
BALANCE, December 31, 2000                    14,415,000            14,415         2,472,764          (1,949,669)           537,510

  Common stock issued
    April 2, 2001
    $0.05 per share                              800,000               800            39,200                   -             40,000

  Common stock issued
    May 7, 2001
    $0.01 per share                            2,032,744              2033            18,296                   -             20,329

  Common stock issued
    September 20, 2001
    $0.005 per share                           3,440,000             3,440            13,760                   -             17,200

STOCK BASED COMPENSATION                               -                 -           102,200                   -            102,200
  EXPENSE

LOSS FOR THE PERIOD                                    -                 -                 -          (1,306,606)        (1,306,606)
------------------------------------------------------------------------------------------------------------------------------------
BALANCE, September 30, 2001                   20,687,744         $  20,688       $ 2,646,220      $   (3,256,275)  $       (589,367)
====================================================================================================================================
</TABLE>


                                      -10-
<PAGE>
MINDFULEYE, INC.
(A development stage company)

Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
September 30, 2001
(Unaudited)
--------------------------------------------------------------------------------

1.       HISTORY AND ORGANIZATION OF THE COMPANY

         The Company was incorporated under the laws of the state of Nevada on
         June 16, 1977 under the name Rabatco, Inc. and changed its name to
         MindfulEye, Inc. ("MindfulEye") on May 12, 2000. The original
         authorized share capital consisted of 100,000 common shares with par
         value of $0.25 per share. On June 20, 1998, the authorized share
         capital was increased to 100,000,000 common shares with a par value of
         $0.001 per share and the Company completed a forward stock split of one
         share of its outstanding share capital for five shares. Since its
         inception, the Company had primarily been engaged in the development of
         mining properties. In 1982, the Company abandoned its remaining assets
         and settled its liabilities. The Company remained inactive until March
         13, 2000.

         On March 13, 2000, the Company acquired all of the issued and
         outstanding common stock of MindfulEye.com Systems, Inc.
         ("MindfulEye.com"). This transaction was accounted for as a reverse
         acquisition recapitalization (see Note 7). The consolidated Company is
         considered to have commenced operations on July 21, 1999, the date of
         incorporation of MindfulEye.com. The efforts of MindfulEye.com have
         been directed towards the development of software for licensing to the
         investment community that delivers proprietary content directly to
         users by web, desktop, wireless, and e-mail interfaces. In accordance
         with Statement of Financial Accounting Standards No. 7 ("SFAS 7")
         "Accounting and Reporting by Development Stage Companies", the Company
         is deemed to be in the development stage.


2.       GOING CONCERN

         The Company's consolidated financial statements are prepared using
         United States 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 experienced operating losses and negative cash flows from
         operations and has relied primarily on debt and equity financing. The
         Company's ability to achieve profitability and positive cash flows from
         operations will depend upon numerous factors. These factors include its
         ability to obtain additional working capital through equity financings
         and its ability to significantly increase revenue from the current line
         of product of services by means of the current marketing strategy.
         Management is in the process of renegotiating the terms of the
         promissory note payable while seeking additional debt and equity
         financing to meet current obligations and to fund operations.


<TABLE>
<CAPTION>
                                                     September 30,  December 31,
                                                         2001           2000
--------------------------------------------------------------------------------
<S>                                                  <C>            <C>
Deficit accumulated during the development stage     $(3,256,275)   $(1,949,669)
================================================================================
Working capital surplus (deficiency)                 $  (779,223)   $   297,662
================================================================================
</TABLE>

3.       BASIS OF PRESENTATION

         These interim financial statements contain the financial statements of
         MindfulEye and MindfulEye.com presented on a consolidated basis in
         accordance with the United States generally accepted accounting
         principles. On March 13, 2000, MindfulEye acquired all of the issued
         and outstanding share capital of MindfulEye.com by issuing 6,910,000
         common shares. As a result of the share exchange, control of the
         combined companies passed to the former shareholders of MindfulEye.com.
         Accounting principles applicable to reverse acquisition
         recapitalization have been applied to record this transaction (Note 7).
         The accounting for this recapitalization is similar to a reverse
         take-over in which the financial statements presented include the
         accounts of MindfulEye.com since incorporation (July 21, 1999) and the
         accounts of the Company since the date of acquisition (March 13, 2000)
         to September 30, 2001. The number of shares outstanding at September
         30, 2001 as presented are those of MindfulEye.


                                      -11-
<PAGE>
MINDFULEYE, INC.
(A development stage company)

Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
September 30, 2001
(Unaudited)
--------------------------------------------------------------------------------

4.       SIGNIFICANT ACCOUNTING POLICIES

         Principles of Consolidation

         The consolidated financial statements include MindfulEye and
         MindfulEye.com. All significant intercompany balances and transactions
         have been eliminated upon consolidation.


         Use of Estimates

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

         Cash and Cash Equivalents

         Cash and cash equivalents include highly liquid investments which are
         readily convertible into cash with original maturities of three months
         or less. As at September 30, 2001, cash and cash equivalents consist of
         cash only.

         Earnings (Loss) Per Share

         Earnings (loss) per share is provided in accordance with Statement of
         Financial Accounting Standards No. 128, ("SFAS 128") "Earnings Per
         Share". Basic earnings (loss) per share is computed by dividing income
         available to common shareholders by the weighted average number of
         common shares outstanding in the period. Diluted earnings per share
         takes into consideration both the weighted average number of common
         shares outstanding and the potentially dilutive common shares.

         Income Taxes

         Income taxes are provided in accordance with Statement of Financial
         Accounting Standards No. 109 ("SFAS 109"), "Accounting for Income
         Taxes". A deferred tax asset or liability is recorded for all temporary
         differences between financial and tax reporting and net operating loss
         carryforwards. Deferred tax expenses (benefit) result from the net
         change during the year of deferred tax assets and liabilities.

         Deferred tax assets are reduced by a valuation allowance when, in the
         opinion of management, it is more likely than not that some portion or
         all of the deferred tax assets will not be realized. Deferred tax
         assets and liabilities are adjusted for the effects of changes in tax
         laws and rates on the date of enactment.


                                      -12-
<PAGE>
MINDFULEYE, INC.
(A development stage company)

Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
September 30, 2001
(Unaudited)
--------------------------------------------------------------------------------


4.       SIGNIFICANT ACCOUNTING POLICIES  (Cont'd)

         Stock Based Compensation

         Statement of Financial Accounting Standards No. 123 ("SFAS 123"),
         "Accounting for Stock-Based Compensation," encourages, but does not
         require, companies to record compensation cost for stock-based employee
         compensation plans at fair value. The Company has chosen to account for
         stock-based compensation using the intrinsic value based method as
         described in the Accounting Principles Board Opinion No. 25,
         "Accounting for Stock Issued to Employees." Accordingly compensation
         cost for stock options is measured as the excess, if any, of the quoted
         market price of the Company's stock at the date of the grant over the
         amount an employee is required to pay for the stock.

         The Company accounts for stock-based compensation issued to
         non-employees in accordance with the provisions of SFAS 123 and the
         Emerging Issues Task Force consensus in Issue No. 96-18 (EITF 96-18"),
         "Accounting for Equity Instruments that are Issued to Other Than
         Employees for Acquiring or in Conjunction with Selling, Goods or
         Services".

         Foreign Currency Translation

         Translation amounts, denominated in foreign currencies, are translated
         into United States currency at exchanges rates prevailing at
         transactions dates. Carrying values of monetary assets and liabilities
         are adjusted at each balance sheet date to reflect the exchange rate at
         that date. Gains and losses from restatement of foreign currency
         monetary assets and liabilities are included in income.

         Capital Assets and Amortization

         Capital assets are recorded at cost less accumulated amortization.
         Amortization is being provided for using the declining balance method
         at the following annual rates:

<TABLE>
<S>                                                              <C>
              Computer software                                  100%
              Computer hardware                                   30%
              Furniture and equipment                             20%
</TABLE>

         Leasehold improvements are amortized over the period of the lease.
         One-half of the above rates are applied in year of acquisition.

         Disclosure About Segments of an Enterprise and Related Information

         Statement of Financial Accounting Standards No. 131 ("SFAS 131"), "
         Disclosure About Segments of an Enterprise and Related information"
         requires use of the management approach model for segment reporting.
         The management approach model is based on the way a company's
         management organizes segments within the company for making operating
         decisions and assessing performance. Reporting segments are based on
         products and services, geography, legal structure, management
         structure, or any other manner in which the management disaggregates a
         company. Currently, SFAS 131 has no effect on the company's financial
         statements as substantially all of the company's operations are
         conducted in one industry segment in Canada.


                                      -13-
<PAGE>
MINDFULEYE, INC.
(A development stage company)

Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
September 30, 2001
(Unaudited)
--------------------------------------------------------------------------------


4.       SIGNIFICANT ACCOUNTING POLICIES  (Cont'd)

         Financial Instruments

         a)       Fair Value Disclosures

                  The carrying value of cash and cash equivalents, trade
                  receivable and accounts payable and accrued liabilities
                  approximate their fair values due to the relatively short
                  periods to maturity of the instruments.

         b)       Foreign Currency Risk

                  The Company operates internationally, which gives rise to the
                  risk that cash flows may be adversely impacted by exchange
                  rate fluctuations.

                  The Company has not entered into contracts for foreign
                  exchange hedges.


5.       CAPITAL ASSETS

<TABLE>
<CAPTION>
                                                                                                         Net Book Value
                                                                                                ---------------------------------
                                                                                                September 30,        December 31,
                                                             Cost           Amortization             2001                 2000
---------------------------------------------------------------------------------------------------------------------------------
<S>                                                        <C>              <C>                 <C>                  <C>
Computer hardware                                          $180,646          $   61,398          $  119,248           $  153,868
Computer software                                            10,563               9,619                 944                3,779
Leasehold improvements                                        9,231               2,769               6,462                7,846
Furniture and equipment                                      81,185              17,983              63,202               74,355
---------------------------------------------------------------------------------------------------------------------------------
                                                           $281,625          $   91,769          $  189,856           $  239,848
=================================================================================================================================
</TABLE>

6.       PROMISSORY NOTE PAYABLE

<TABLE>
<CAPTION>
                                                                                    September 30        December 31,
                                                                                            2001                2000
---------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                 <C>                 <C>
         Promissory Note payable to Netcurrents, Inc., bearing interest at 10%
         per annum on the principal amount outstanding having a maturity
         date of the earlier of i) October 31, 2001, ii) the closing of the
         acquisition of the Company by Netcurrents, Inc. or iii) closing of
         any funding in the event the acquisition does not close.
         Principal amount advanced to date.                                          $  490,000          $       -
=================================================================================================================================
</TABLE>

         On October 5, 2001, the terms of the promissory note payable agreement
         was amended to change the maturity date in i) above to December 31,
         2001.


                                      -14-
<PAGE>
MINDFULEYE, INC.
(A development stage company)

Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
September 30, 2001
(Unaudited)
--------------------------------------------------------------------------------

7.       RECAPITALIZATION

         On March 13, 2000, the Company issued 6,910,000 common shares to
         acquire 100% of the issued and outstanding shares of MindfulEye.com at
         a deemed value of $2,080,884.

         As a result of this transaction the former shareholders of
         MindfulEye.com acquired control over a majority of shares of the
         Company. Accounting principles applicable to reverse acquisition
         recapitalization have been applied to record this transaction. Under
         this basis of accounting, MindfulEye.com has been identified as the
         acquirer and, accordingly, the combined company is considered to be a
         continuation of the operations of MindfulEye.com, the legal subsidiary.
         In accounting for this transaction:

         i)       MindfulEye.com is deemed to be the purchaser and parent
                  company for accounting purposes. Accordingly, its net assets
                  are included in the consolidated balance sheet at their
                  historical book values;

         ii)      The deemed acquisition of the Company has been accounted for
                  by the purchase method with the net assets of the Company
                  recorded at fair market value at the date of acquisition. The
                  fair market value acquired is as follows:

<TABLE>
<S>                                                                  <C>
                     Cash and cash equivalents                       $2,257,500
                     Due to related parties                            (173,116)
                     Accounts payable and accrued liabilities            (3,500)
                                                                     -----------
                                                                     $2,080,884
                                                                     ==========
</TABLE>

         iii)     Historical cost financial statements presented are those of
                  MindfulEye.com, with equity amounts of MindfulEye.com restated
                  to reflect the number of shares received in the business
                  combination.

         iv)      The consolidated statements of operations and cash flows
                  include MindfulEye.com's results of operations and cash flows
                  from July 21, 1999 (date of incorporation) and the Company's
                  results of operations from March 13, 2000 (date of
                  acquisition).


8.       CAPITAL STOCK

         a)       As a result of the recapitalization described in Note 7,
                  MindfulEye.com was deemed to be the acquirer for accounting
                  purposes. However, the number of common shares issued and
                  outstanding of 6,905,000 are MindfulEye's.

                  As consideration to acquire 100% of the outstanding shares of
                  MindfulEye.com, the Company issued 6,910,000 shares at a
                  deemed value of $2,080,884.

         b)       On November 1, 2000, the Company completed a private placement
                  whereby it issued 300,000 shares for net cash proceeds of
                  $150,000.

         c)       On November 12, 2000, the Company completed a private
                  placement whereby it issued 300,000 shares for net cash
                  proceeds of $150,000.

         d)       On April 2, 2001, the Company issued 800,000 shares with a
                  deemed value of $40,000 for professional services rendered to
                  the Company (Note 11a).

         e)       On May 7, 2001, the Company issued 2,032,744 shares with a
                  deemed value of $20,329 for professional services rendered by
                  a corporate consultant and officers of the Company who had
                  performed services in addition to those required by employment
                  contracts (Note 11b).

         f)       On September 20, 2001, the Company issued 3,440,000 shares
                  with a deemed value of $17,200 for professional services
                  rendered by corporate consultant and officers of the Company
                  who had performed services in addition to those required by
                  employment contracts (Note 11c).


                                      -15-
<PAGE>
MINDFULEYE, INC.
(A development stage company)

Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
September 30, 2001
(Unaudited)
--------------------------------------------------------------------------------


9.       STOCK OPTIONS AND WARRANTS

         Under the Company's stock option plan, incentive and non-qualified
         options may be granted to directors, officers, employees and
         consultants to acquire up to 3,000,000 authorized but unissued common
         shares of the Company. No stock option granted under the stock option
         plan is transferable by the optionee other than by will or the laws of
         descent and distributions.

         The exercise price of each option granted to an optionee may not be
         less than the market price of the fair market value of the common share
         on the date of the grant, and in respect of each stock option granted
         to a greater-than ten percent shareholder, the exercise price shall not
         be less than 110% of the fair market value of the common share on the
         date of the grant.

         The term of the option granted may not exceed 10 years from the date of
         the grant, and in the case of greater-than ten percent shareholders,
         the term may not exceed 5 years from the date of the grant. Options
         granted under the plan generally vest over a two-year period, with
         one-quarter becoming exercisable at the end of every six months
         following the date of grant. The plan administrator may accelerate the
         vesting of options at its sole discretion.

         Stock options totalling 1,871,000 were outstanding at
         September 30, 2001 as follows

<TABLE>
<CAPTION>
                        Number             Exercise
                     of Shares                Price      Expiry date
<S>                                        <C>          <C>
                     1,287,500                $3.50     June 7, 2010
                        95,000                 3.50     July 28, 2010
                         6,500                 3.50     September 29, 2010
                       412,000                 0.75     November 24, 2010
                        50,000                 0.38     December 22, 2010
                        20,000                 0.23     January 8, 2011
</TABLE>


10.      STOCK BASED COMPENSATION EXPENSE

         Following is a summary of the stock option activity:

<TABLE>
<CAPTION>
                                                                   Period Ended
                                                                   September 30,
                                                                       2001
--------------------------------------------------------------------------------
<S>                                                                <C>
Outstanding, at December 31, 2000                                   1,963,750
Granted                                                                20,000
Forfeited                                                            (112,750)
Exercised                                                                   -
--------------------------------------------------------------------------------
Outstanding, at September 30, 2001                                  1,871,000
================================================================================
WEIGHTED AVERAGE EXERCISE PRICES

Outstanding, at December 31, 2000                                  $     2.83
================================================================================
Granted                                                            $      .23
================================================================================
Forfeited                                                          $     3.25
================================================================================
Outstanding, at September 30, 2001                                 $     2.78
================================================================================
Weighted average fair value of options granted during the period   $     0.23
================================================================================
</TABLE>


                                      -16-
<PAGE>
MINDFULEYE, INC.
(A development stage company)

Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
September 30, 2001
(Unaudited)
--------------------------------------------------------------------------------


10.      STOCK-BASED COMPENSATION EXPENSE (Cont'd)

         Following is a summary of the status of the options outstanding at
September 30, 2001:

<TABLE>
<CAPTION>
                                Outstanding Options         Exercisable Options
                        ---------------------------------   -------------------
                                      Weighted
                                       Average   Weighted              Weighted
                                     Remaining    Average               Average
                        Number of  Contractual   Exercise   Number of  Exercise
Exercise Price            Options         Life      Price     Options     Price
--------------------------------------------------------------------------------
<S>                     <C>        <C>          <C>         <C>        <C>
$3.50                   1,389,000         8.69  $   3.50      821,500  $   3.50
$0.75 to $0.23            482,000         8.78  $   0.69      220,000  $   0.73
================================================================================
</TABLE>

         Compensation

         Of the 1,871,000 total outstanding options as at September 30, 2001 the
         following applies:

         a)       The Company has 184,000 options granted to consultants. These
                  options are accounted for under the Emerging Issues Task Force
                  Consensus Issue (EITF) No. 96-18. Accordingly, using the
                  Black-Scholes option pricing model, the options are marked to
                  fair value through charges to operations as stock-based
                  compensation. Stock-based compensation recognized pursuant to
                  EITF 96-18 during the three months ended September 30, 2001
                  was $nil (September 30, 2000; $103,850).

         b)       The Company has 1,687,000 options granted to employees. The
                  Company applies Accounting Principles Board Opinion No, 25
                  "Accounting for Stock Issued to Employees" in accounting for
                  its stock option plan. Had compensation expense relating to
                  the remaining 1,687,000 options granted to employees been
                  recognized on the basis of fair value pursuant to Statement of
                  Financial Accounting Standard No. 123, net loss and loss per
                  share would have been adjusted as follows:

<TABLE>
<CAPTION>
                                                         Period From                   Period From                   Period From
                                                    July 21, 1999 to            January 1, 2001 to            January 1, 2000 to
                                                  September 30, 2001            September 30, 2001            September 30, 2000
------------------------------------------------------------------------------------------------------------------------------------
<S>                                               <C>                           <C>                           <C>
LOSS FOR THE PERIOD
   As reported                                       $   (3,256,275)               $   (1,306,606)               $   (1,225,845)
------------------------------------------------------------------------------------------------------------------------------------
   Pro forma                                         $   (3,320,996)               $   (1,371,327)               $   (1,586,717)
====================================================================================================================================
BASIC AND DILUTED LOSS PER SHARE
   As reported                                       $                             $        (0.08)               $        (0.10)
====================================================================================================================================
   Pro forma                                         $                             $        (0.08)               $        (0.13)
====================================================================================================================================
</TABLE>

         The fair value of each option granted is estimated using the
         Black-Scholes Option Pricing Model. The assumptions used in calculating
         fair values are as follows:

<TABLE>
<CAPTION>
                                                Period from        Period from
                                                 January 1,         January 1,
                                                    2001 to            2000 to
                                              September 30,      September 30,
                                                       2001               2000
--------------------------------------------------------------------------------
<S>                                           <C>                <C>
Risk free interest rate                                4.94%             6.425%
Expected life of the options                     9.04 years         2.05 years
Expected volatility                                 332.250%            138.93%
Expected dividend yield                                   -                  -
================================================================================
</TABLE>


                                      -17-

<PAGE>
MINDFULEYE, INC.
(A development stage company)

Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
September 30, 2001
(Unaudited)
--------------------------------------------------------------------------------


11.      SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS


         The following non-cash transactions occurred during the nine-month
         period ended September 30, 2001.

         a)       On April 2, 2001, the Company issued 800,000 shares with a
                  deemed value of $40,000 for professional services rendered to
                  the company (Note 8d).

         b)       On May 7, 2001, the Company issued 2,032,744 shares with a
                  deemed value of $20,329 for professional services rendered by
                  corporate consultant and officers of the company who had
                  performed services in addition to those required by their
                  employment contracts (Note 8e).

         c)       On September 20, 2001, the Company issued 3,440,000 shares
                  with a deemed value of $17,200 for professional services
                  rendered by corporate consultant and officers of the Company
                  who had performed services in addition to those required by
                  their employment contracts (Note 8f).

         During the twelve month period ended December 31, 2000 one non-cash
         transaction occurred in which the company issued 6,910,000 at deemed
         value of $2,080,884 to acquire 100% of the outstanding shares of
         MindfulEye.com (Note 7).


12.      RELATED PARTY TRANSACTIONS

         The Company entered into the following transactions with related
         parties during the period ended September 30 2001, as follows:

         a)       Paid or accrued $37,529 to directors and officers for
                  consulting fees (September 30, 2000 - $58,875).

         b)       Included in accounts payables and accrued liabilities is an
                  amount of $62,554 which is payable to management relating to
                  deferred salaries and severance pay. (September 30, 2000 -
                  $nil)


13.      COMMITMENTS

         The Company leases office premises pursuant to an operating lease,
         which expires in March 2005. Future annual lease payments are as
         follows:

<TABLE>
<S>                                                     <C>
                         2002                           $  95,808
                         2003                              99,089
                         2004                              99,089
                         2005                              74,317
                         ----------------------------------------
                                                        $ 368,303
                         ========================================
</TABLE>

14.      INCOME TAXES

         The Company's total deferred tax asset is as follows:

<TABLE>
<CAPTION>
                                                   September 30,  December 31,
                                                           2001          2000
--------------------------------------------------------------------------------
<S>                                                <C>            <C>
         Tax benefit of cumulative operating loss   $ 1,104,533    $   663,000

         Valuation allowance                         (1,104,533)      (663,000)
--------------------------------------------------------------------------------
                                                    $         -    $         -
================================================================================
</TABLE>

         The Company has a net operating loss carry forward of approximately
         $3,250,000, which expires in 2007 and 2008 fiscal years. The Company
         provides a full valuation allowance on the deferred tax asset because
         of the uncertainty regarding realization.


                                      -18-


<PAGE>
MINDFULEYE, INC.
(A development stage company)

Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
September 30, 2001
(Unaudited)
--------------------------------------------------------------------------------


15.      SUBSEQUENT EVENT

         Effective October 3, 2001, the Company's securities ceased being quoted
         on the OTC Bulletin Board service as a result of late filing of the
         June 30, 2001 quarterly reports with the Securities Exchange Commission
         (SEC). On November 1, 2001 the quarterly reports were filed with the
         SEC, making the company eligible to apply to have its securities quoted
         on the OTC Bulletin Board service.

16.      OTHER MATERIAL EVENTS

         Effective August 10, 2001 Amanda Kerr resigned as director and
         corporate secretary of the Company.

         Effective August 10, 2001, Todd Cusolle was appointed corporate
         secretary of the Company.

         Effective September 10, 2001, Scott Kerr was appointed a director of
         the Company.


                                      -19-


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

GENERAL OVERVIEW

MindfulEye, Inc. (formerly Rabatco, Inc.) (the "Company" or "MindfulEye"), was
incorporated under the laws of the State of Nevada on June 16, 1977. From the
Company's inception in 1977 through 1982, the Company was primarily engaged in
the business of mineral resource exploration. The Company remained inactive from
1982 to 1998. On March 13, 2000, the Company completed the acquisition of
MindfulEye.com Systems, Inc., a company engaged in the business of computing
software and technology research and development. On May 12, 2000, the Company
changed its name to MindfulEye, Inc.

MindfulEye has developed a new category of technologies that can mine raw text
content from digital sources including the Internet and can, through the use of
our proprietary artificial intelligence technology known as Lexant(TM), extract
and deliver important information to various organizations.

MindfulEye's technologies are designed to:

-        Monitor Internet content such as Internet Relay Chat (IRC) channels,
         Web-based discussion forums, editorial Web sites, and other sources of
         digital content such as newswire and other electronic data feeds in
         near real-time for specific types of information;

-        Match text information to specific types of concepts such as stock
         ticker symbols, organizations, people, or policies;

-        Rank texts for sentiment, classify texts by topic, summarize texts, and
         rank texts for linguistic relevance using a branch of Artificial
         Intelligence (AI) technology known as Natural Language Processing
         (NLP); and

-        Deliver information using a variety of delivery methods including World
         Wide Web applications, desktop computer applications, e-mail, and
         applications for wireless devices.

Our technologies are built on leading edge software from Microsoft. In 2000,
MindfulEye entered into a strategic partnership with Microsoft that provides us
with special access to Microsoft services and software.

Since March, MindfulEye has been aggressively pursuing opportunities to
co-develop and license "private-label" applications of our technology with third
parties in a variety of vertical markets. Those markets include the financial
sector, the entertainment industry, the polling and public relations markets,
consumer products marketing, customer relationship management (CRM), the risk
management and credit rating sector, the healthcare market, and the markets for
Internet content management and Internet search services. In August, we entered
into our first such agreement with a major financial markets regulator to
license our technology platform and


                                      -20-
<PAGE>
to purchase our services in connection with the development of a custom,
"private-label" application to suit their specific requirements. This is a
one-year agreement with an option to renew in subsequent years.

The following discussion and analysis explains MindfulEye's results of
operations for the quarter ended September 30, 2001 compared with the quarter
ended September 30, 2000. You should review the discussion and analysis of
financial condition in conjunction with MindfulEye's financial statements and
the related notes, as well as statements detailed in MindfulEye's Securities and
Exchange Commission filings.

RESULTS OF OPERATIONS

FISCAL QUARTER ENDED SEPTEMBER 30, 2001 COMPARED TO QUARTER ENDED SEPTEMBER 30,
2000

REVENUES. The Company had revenues of $62,328 for the quarter ended September
30, 2001 compared to no revenues for the quarter ended September 30, 2000. This
increase in revenue is primarily attributable to our beginning work on our first
major technology platform licensing project in September. MindfulEye had
interest income of $ 35 for the quarter ended September 30, 2001 compared to
$11,618 for the quarter ended September 30, 2000.

EXPENSES. During the comparative period of the last fiscal year the Company was
not in full operation. Therefore, expenses in total, while numerated herein
absolutely and shown as a percent of the comparative period, are significantly
different from the comparative period last year. Among the decrease in expenses
overall, is a decrease in wages and salary expense attributable to a
streamlining of staffing requirements initiated on June 21, 2001 and concluded
on September 17, 2001. Although expenses decreased overall, merger costs
increased.

During the quarter ended September 30, 2001, MindfulEye incurred total expenses
of $252,453 compared to $478,313 for the quarter ended September 30, 2000:
related primarily to: (i) research and development of its web technologies; (ii)
marketing and brand development; (iii) professional and legal fees relating to
its merger activities and its Securities and Exchange Commission reports and
(iv) general overhead and administrative expenses.

During the quarter ended September 30, 2001, MindfulEye paid consulting fees in
the amount of $17,252 compared to $128,760 for the quarter ended September 30,
2000, a decrease of 746.3%. This was primarily attributable to our decreased
need for consulting services immediately following the quarter ended June 30,
2000 as additional full-time staff was hired. MindfulEye paid legal and
accounting fees of $3,428 for the quarter ended September 30, 2001 related to
preparation of its filings with the Securities and Exchange Commission, patent
searches and other corporate and accounting matters compared to $29,596 for the
quarter ended September 30, 2000, a decrease of 863.3% attributable in part to a
decrease in legal expenditures in connection with our patent application.

OTHER EXPENSES. MindfulEye incurred other expenses, including amortization
expenses of $16,664 for the quarter ended September 30, 2001 compared to $9,730
for the quarter ended September 30, 2000, an increase of 71.2% primarily
attributable to the depreciation of certain


                                      -21-
<PAGE>
computer equipment acquired in the third quarter of 2000; foreign exchange gain
of $6,300 for the quarter ended September 30, 2001 compared to a foreign
exchange gain of 2,987 for the quarter ended September 30, 2000, a 110% increase
due primarily to a decrease in the number of U.S. dollar transactions in the
period; insurance expense of $8,698 for the quarter ended September 30, 2001
compared to $336 for the quarter ended September 30, 2000, an increase of
2,588.6% related to the purchase of Directors and Officers insurance beginning
in the fourth quarter of 2000; Interest and bank charges expenses of $12,909 for
the quarter ended September 30, 2001 compared to $584 for the quarter ended
September 30, 2000, an increase of 2,577.2%, due primarily to the Company's
increased liquidity needs; investor relations expenses of $248 for the quarter
ended September 30, 2001 compared to $3,760 for the quarter ended September 30,
2000, a decrease of 1,416% related to a decrease in need for investor relations
communications during the period; marketing and brand development expenses of
$nil compared to $48,628 for the quarter ended September 30, 2000, a
mathematically infinite decrease primarily attributable to the transition of our
business from higher-cost subscription sales to lower-cost platform technology
sales and certain other cost containment policies which were instituted during
the three months ended June 30, 2001; infeed services expenses of $10,372 for
the quarter ended September 30, 2001 compared to $10,798 for the quarter ended
September 30, 2000, a decrease of 4.1%; office and miscellaneous expenses of
$7,560 for the quarter ended September 30, 2001 compared to $32,430 for the
quarter ended September 30, 2000, a decrease of 328.9% due to certain cost
containment policies instituted in the 3 months ending March 31, 2001; rent and
utilities expenses of $22,751 compared to $24,954 ($8,893 of which was prepaid)
for the quarter ended September 30, 2000, a decrease of 9.6%; telephone and
communication expenses of $6,298 for the quarter ended September 30, 2001
compared to $13,726 for the quarter ended September 30, 2000, a decrease of
117.9%, primarily attributable to certain cost containment policies instituted
during the 3 months ending March 31, 2001; wages and salary expenses of $60,616
for the quarter ended September 30, 2001 compared to $180,768 for the quarter
ended September 30, 2000, a decrease of 198.2%. Merger expenses were $92,682 for
the quarter ended September 30, 2001 and consisted of legal fees, professional
fees, travel and communications costs relating to the proposed merger, which was
announced on February 28, 2001. There were no merger expenses in the comparable
period of 2000. Non-cash stock based compensation expenses were $nil for the
quarter ended September 30, 2001 compared to $nil for the quarter ended
September 30, 2000.

NET LOSS. MindfulEye had a net loss of $1,306,606 or basic and diluted loss of
$0.08 per share for the nine months ended September 30, 2001 compared to a net
loss of $1,228,380 or basic and diluted loss of $0.10 per share for the nine
months ended September 30, 2000. MindfulEye's net loss represents an increase in
this category of 6.3%.

PLAN OF OPERATION

Our plan of operation is based on the operating history of MindfulEye, our
experience in the software industry, and our discussions with third parties, the
SEC filings of our competitors and the decisions of our management. Set out
below is a summary of our plan of operation for the twelve-month period
commencing on July 1, 2001.

Subsequent to our fiscal year end of December 31, 2000, we continue to
experience delays in raising additional financing. This has resulted in a delay
in the development of our technologies


                                      -22-
<PAGE>
and our inability to intensify our marketing and promotional efforts to secure
strategic customer relationships. Our ability to develop new applications of our
technology and to continue as a going concern will depend on our ability to
obtain future financing.

As anticipated, sales during the period from our Surveillance service, which has
been distributed exclusively by Canada Newswire in Canada became less of a
factor as we transitioned our main sources of revenue away from subscription
sales and into licenses of our technology platform and related technology
consulting and development services. We expect this shift to continue to result
in significantly higher revenue growth with lower marginal costs. As anticipated
we entered into our first such agreement in August with a major financial
markets regulator to license our technology platform ant to purchase our
services in connection with the development of a custom, "private-label"
application to suit their specific requirements. This is a one-year agreement
with an option to renew in subsequent years. We expect to continue our efforts
to license our technology platform and to sell related technology consulting and
development services over the next twelve months. We anticipate our operating
activities during the next few months will focus primarily on our efforts to:

         a.       Secure additional financing for general working capital
                  purposes and for our efforts to begin the initial
                  implementation of our marketing plan;

         b.       Generate revenues from licensing our technology, including our
                  proprietary artificial intelligence technology known as
                  Lexant(TM), and developing custom, "private-label"
                  applications of our technologies;

         c.       Continue developing and enhancing our artificial intelligence
                  technology, Lexant; and

         d.       Hiring and training customer support personnel as significant
                  revenues are generated.

LIQUIDITY AND CAPITAL RESOURCES

As of September 30, 2001, MindfulEye had a working capital deficit in the amount
of $779,223 as compared to a working capital surplus of $297,662 as of December
31, 2000. This was a decrease in working capital of $1,076,885 or more than
300%. This decrease was primarily attributable to the fact that the Company was
in its infancy in the comparable period of 2000 and had not yet finalized the
development of its products, management organization, or operating
infrastructure, initiatives which generally require large expenditures without
commensurate revenue. The full effects of the Company's operating and related
costs during the period ended September 30, 2000 were thereby not fully realized
and adjustments have not been made for these effects in our discussion of the
Company's results so that comparisons from the period ended September 30, 2000
with the comparable period of 2001 are not completely meaningful. MindfulEye had
cash or cash equivalents of $72,397, accounts receivables of $26,766 and prepaid
expenses and deposits in the amount of $15,698. MindfulEye had accounts payable
and accrued liabilities in the amount of $344,726 and a short-term promissory
note payable to NetCurrents, Inc. of up to $490,000. This short-term debt
facility from NetCurrents, Inc. is secured by a General Security Agreement and
bears interest at 10% per annum on the principal amount outstanding. Both the
principal and any interest accrued are due and payable in a single installment
the earlier of i) December 31, 2001, ii) the closing of the acquisition of the
Company by NetCurrents, Inc. or iii) closing of any funding in the event the
acquisition does not close.


                                      -23-
<PAGE>
MindfulEye anticipates that it will be required to raise $2,000,000 to meet its
anticipated cash requirements for planned expansion of the Company's operations,
marketing, and technology development during the ensuing six months. As of
September 30, 2001, MindfulEye did not have arrangements for financing, but is
currently actively working toward finalizing plans for future financing. There
can be no assurance that we will be successful in acquiring sufficient financing
to fund our plan of operation on terms acceptable to MindfulEye, if at all. Any
inability to obtain additional financing, as needed, will have a material
adverse effect on the Company, requiring the Company to significantly curtail or
possibly cease its operations. In addition, any additional equity financing may
involve substantial dilution to the interests of the Company's then existing
shareholders.

While MindfulEye believes its capital requirement estimates are reasonable, such
estimates can change for many different reasons, some of which are beyond
MindfulEye's control. MindfulEye is a development stage company, which means
that it is in the process of developing its technologies and that it currently
has very little revenues from its operations. MindfulEye currently has only one
significant customer who has licensed our platform technologies and related
services. MindfulEye does not believe we will receive any significant revenue
from its subscription services or from technology platform licensing until at
least the first quarter of 2002. There can be no assurance that a sufficient
number of subscribers will subscribe to MindfulEye's services or a sufficient
number of licensees will license our platform technologies and associated
services to make them commercially viable.

MindfulEye does not anticipate acquiring or disposing of any significant
equipment in the fourth quarter of 2001.

PERSONNEL

On June 21, 2001 the Company began a plan to restructure its operations and
management team and to streamline its staffing requirements to focus on its core
customer projects. That plan was finalized on September 17, 2001 at which time
we reduced our management and staff to six full-time employees and four
part-time employees. This included two management personnel, seven programmers
and developers who assisted in the development of the Company's internal
operating and information systems and technologies, and one employee who was
engaged in general and administrative functions.

MindfulEye also engages independent consultants to assist in the development of
its technologies and applications, for public relations services, services
relating to financing, merger, and acquisition transactions, marketing services
and communication consulting. MindfulEye may also engage additional consultants
in the future to assist it with the development of software and information
systems and implementation of its business plan.

MindfulEye's success will depend in large part on its ability to attract and
retain skilled and experienced employees and consultants. MindfulEye does not
anticipate any of its employees will be covered by a collective bargaining
agreement. MindfulEye does not currently maintain key man life insurance on any
of its directors or executive officers.


                                      -24-
<PAGE>
INFLATION
MindfulEye's results of operations have not been affected by inflation and
management does not expect inflation to have a significant effect on the
Company's operations in the future.

DIVIDENDS
The Company has not paid any dividends on its shares of common stock.


                                      -25-
<PAGE>
                           PART II - OTHER INFORMATION


LEGAL PROCEEDINGS

On February 15, 2001, action was commenced and filed in the Supreme Court of
British Columbia against the Company by Capital Idea Financial in the amount of
approximately $20,000 for non-payment of a debt for services rendered pursuant
to an Investor Relations and Marketing Agreement dated September 12, 2000. We
believe the claim is without merit since we terminated the Agreement due to
non-performance and we intend to vigorously defend against it. Accordingly, we
have filed a Statement of Defence. As of September 30, 2001, this action had not
been set for trial.

On July 3, 2001, action was commenced and filed in the Supreme Court of British
Columbia against the Company by Mr. Ray Torresan ("Torresan") in the amount of
approximately $30,000 for non-payment of a settlement agreement made in
connection with the termination of his employment on April 20, 2001. We believed
that the claim was without merit since Mr. Torresan had materially breached the
terms of that agreement and so filed a Statement of Defence on May 19, 2001.
On October 9, 2001, Mr. Torresan was awarded a summary judgment against us,
except that the court gave us leave to file a counterclaim for damages in
connection with what we had believed to be his material breach of our agreement.
On October 26, 2001, the Company entered into an agreement with Torresan whereby
the amount of the settlement was reduced in consideration of our dropping our
counterclaim and whereby the Company will make periodic payments to Torresan on
the new amount.

CHANGES IN SECURITIES AND USE OF PROCEEDS

On September 20, 2001, the Company issued, in the aggregate, 3,440,000 fully
paid and non-assessable shares of common stock to certain advisors, consultants
and employees as compensation for contractual services rendered. All such shares
were issued in "offshore transactions" within the meaning of Rule 902(h) under
the Securities Act to persons who are not "U.S. Persons" within the meaning of
Rule 902(k) under the Securities Act. Following such issuances, the Company had
20,687,744 shares of common stock issued and outstanding.

DEFAULTS UPON SENIOR SECURITIES

None.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

OTHER INFORMATION

None.


                                      -26-
<PAGE>
EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits

         No exhibits are filed with this report.

(b)      Reports on Form 8-K

On October 5, 2001, Registrant filed a Current Report on Form 8-K to relate the
following information:

         -        a restructuring of its operations and management team.

         -        the resignation of Amanda Kerr from the Board of Directors of
                  the Company.

         -        the appointment of Scott Kerr to the Board of Directors to
                  replace Amanda Kerr.

         -        the appointment of Todd Cusolle as corporate secretary to
                  replace Amanda Kerr in that position.

         -        the failure of the Company to file its Form 10-QSB for the
                  period ended June 30, 2001 in a timely fashion and the
                  subsequent ineligibility of its common stock to continue to be
                  quoted using the NASD Over-the-Counter Bulletin Board service.


                                      -27-
<PAGE>
                                   SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

Date:  November 19, 2001
                                       MINDFULEYE, INC.
                                   By: /s/ Todd Cusolle
                                       -----------------------------------------
                                       Todd Cusolle, Secretary


                                   By: /s/ Scott Kerr
                                       -----------------------------------------
                                       Scott Kerr, Principal Financial Officer


                                      -28-