SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB


                  Annual report pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

                  For the fiscal year ended December 31, 1999.
                         Commission file number 0-19409

                               SYNERGY BRANDS INC.

             (Exact name of registrant as specified in its charter)

                               DELAWARE 22-2993066
                    (State of incorporation) (I.R.S. Employer
                               Identification No.)

                               40 Underhill Blvd.
                                Syosset, NY 11791
                         (Address of corporate offices)

        Registrant's telephone number, including area code: 516-682-1980

             Securities registered pursuant to Section 12(b) of the
                                      Act:

                      Title of Each Class Name of Exchange

              Common Stock, $.001 par value NASDAQ/Small-Cap System
                            and Boston Stock Exchange


     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 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__

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

     On March 31,  2000,  the  aggregate  market  value of the  voting  stock of
Synergy Brands Inc.,  held by  non-affiliates  of the  Registrant  (based on the
closing  price as  reported  on the  NASDAQ  for March 26,  2000)  approximately
$38,000,000.  This  determination  of  affiliate  status  is not  necessarily  a
conclusive determination for other purposes. The number of outstanding shares of
the Registrant's Common Stock as of March 31, 2000 was 14,455,616.

                       DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the Proxy  Statement for  Registrant's  1999 Annual  Meeting of
Stockholders to be held June 2000 are incorporated by reference in Part III (for
other documents incorporated by reference refer to Exhibit Index at page 35)

                                      -1-

<PAGE>

                                     PART I

     Other  than  historical  and  factual  statements,  the  matters  and items
discussed  in this report on Form 10-KSB are  forward-looking  information  that
involve  risks and  uncertainties.  The  Company's  actual  results  may  differ
materially from the results discussed in the forward-looking statements. Factors
that could contribute to such  differences are discussed in the  forward-looking
statements  and are  summarized  in  "Management's  Discussion  and  Analysis of
Financial Condition and Results of Operations - Forward-Looking  Information and
Cautionary Statements."

ITEM 1.  BUSINESS

A.       OVERVIEW

     Synergy  Brands  Inc.  (NASDAQ:  SYBR) and its  consolidated  subsidiaries,
("SYBR"  or  "the  Company")  have  developed,  operate  and  continue  to  seek
opportunities to establish,  Internet  Businesses directed at sale of variety of
products as well as  Partnering  and seeking to partner or invest with  advanced
technologies to enhance the Company's properties and participate in new ventures
synergistic with the other operations of the Company (Internet  Infrastructure),
including   establishment  of  strategic   contacts  and  alliances  with  other
companies.

     SYBR's Internet strategy includes the internal development and operation of
subsidiaries  as well as the taking of  strategic  positions  in other  Internet
companies  that have  demonstrated  synergies with SYBR's core  businesses.  The
Company's  strategy also envisions and promotes  opportunities  for  synergistic
business  relationships  among the Internet  companies within its portfolio.  At
March 31, 2000 SYBR's Internet subsidiaries included  BeautyBuys.com (50% voting
interest  through the  Company's  wholly owned  subsidiary  SYBR.com  Inc.) and,
Netcigar.com (wholly owned by SYBR.com Inc.), SYBR.com Inc. as well as PHS Group
(a  subsidiary  of  BeautyBuys.com  Inc.).  BeautyBuys.com  is a leading  online
Business to Consumer beauty  department store consisting of 7,000 unique brands.
In addition the Company has developed through  BeautyBuys.com Inc. Dealbynet.com
as an internet domain expected to be further  developed  independently as SYBR's
supply  chain  integration  model for its  Business to Business  platform  being
developed in the Health and Beauty as well as grocery  businesses.  Netcigar.com
is a leading  online  retailer of premium cigars and other related luxury items.
PHS is the Company's  fulfillment platform for its Business to Business Internet
operations.  The  facility  allows for  automated  order  processing,  inventory
management   and  customer   service.   PHS  Group  Inc.  is  a  subsidiary   of
BeautyBuys.com Inc.

     In November of 1999 SYBR sold a 50% voting  interest in  BeautyBuys.com  to
Sinclair Broadcast Group (NASDAQ: SBGI), the largest U.S. independent Television
broadcaster for approximately $70 million.  Sinclair owns 61 television stations
in 40 U.S. markets reaching approximately 25% of the U.S. population. As part of
the purchase Sinclair also acquired a 16.5% equity stake in SYBR, thereby making
Sinclair the largest shareholder of SYBR.

     The  Company has  adopted a strategy  of seeking  opportunities  to realize
gains through  investments or having separate  subsidiaries or affiliates buy or
sell minority  interests to outside  investors.  The Company  believes that this
strategy  provides the ability to increase  shareholder value as well as provide
capital to support the growth in the Company's subsidiaries and investments. The
Company  expects to continue to develop and refine the  products and services of
its  businesses  focusing on the internet as the primary  mode of  distribution,
with the goal of increasing revenue as new Products are commercially introduced,
and to continue to pursue the  acquisition of or the  investment in,  additional
Internet  companies.  The Company  will seek to continue to attract  traditional
media  investments,  partner with advanced value added technologies that will be
synergistic to its internet  platforms as well as partner with existing internet
companies  to achieve its goals of building a  strategic  portfolio  of internet
assets.

                                      -2-

<PAGE>

     The  present  focus of the  Company is on product  sales  through  internet
channels.  Subsidiaries of the Company historically active in non-internet sales
for the Company,  New Era Foods Inc.,  Synergy  Brands  Distribution  Inc.,  and
Island Wholesale Grocers Inc. have become inactive.  In the tobacco product area
the Company  also  maintains a majority  (67%) stock  interest in Premium  Cigar
Wrappers Inc., a company involved in the procurement and sale of raw tobacco for
cigar  production  and the Company  continues to distribute to  wholesalers  and
retailers  cigar and cigar  products via land channels  through its wholly owned
subsidiary  Gran  Reserve  Corp.,  Business  which  is being  transformed  to an
Internet Platform through Netcigar.com.

     THE COMPANY'S  CORPORATE OFFICE IS LOCATED AT 40 UNDERHILL BLVD.,  SYOSSET,
NEW YORK  11791,  AND ITS  TELEPHONE  NUMBER  IS  (516)  682-1980.  THE  COMPANY
MAINTAINS A CORPORATE WEBSITE AT WWW.SYNERGYBRANDS.COM.

                                      -3-

<PAGE>

B.       INTERNET SALES

         1.   BEAUTYBUYS.COM.

     In the first quarter of 1999 the Company established through its subsidiary
BeautyBuys.Com Inc. an e-commerce website  (www.BeautyBuys.com)  to offer direct
to the consumer via internet sales on a non-exclusive  basis a popular selection
of nationally  branded beauty care products,  including salon hair and skin care
items,  designer  fragrances and cosmetics,  and consumer health and beauty care
products,  most being  previously sold by the Company as part of its traditional
distribution  business.  BeautyBuys.com  Inc. has further  expanded its internet
operations  into B2B sales of most products  offered through its retail internet
sales as well as adapting much of the  Company's  historical  wholesale  product
trade  outside  the  health  and  beauty  care  industry  to the  B2B  platform.
Advertising  on radio,  television  and on-line  channels  is an  integral  part
overall  traffic-building  plan for  BeautyBuys.com.  To  further  this  area of
expanded awareness of the BeautyBuys.com presence in the marketplace the Company
has  established  for  BeautyBuys.com  a  strategic  alliance  with  a  material
advertising  source in Sinclair  Broadcasting  Inc.,  and plans to partner  with
others.

     In November of 1999,  Sinclair Broadcast Group, Inc. (NASDAQ Symbol,  SBGI)
acquired a 50% voting  interest in  BeautyBuys.com,  Inc.,  in exchange  for $70
million in advertising on television,  radio and within the Sinclair  network of
61  television  stations,  in 40 markets  and 6 radio  stations.  Sinclair  will
provide production, creative services, media planning and exclusive placement in
their online  communities  through  their  assistance  and  advertising  time by
contract  devoted to  BeautyBuys.com.  The partnership  with Sinclair  Broadcast
Group,  Inc.  and the  exchange of media for equity;  the Company  believes is a
milestone  that will  accelerate the growth and  development of  BeautyBuys.com,
Inc. In addition to the  considerable  media resources that are now available to
BeautyBuys.com,  Inc,  there is a wealth of  advertising  and  media  management
expertise  that Sinclair is providing to the  partnership.  Sinclair owns and-or
programs 61  television  stations in the United  States that reach almost 25% of
the  television  viewing  population  in 40 markets  that focus on the  American
middle market.  Sinclair stations are affiliated with the 4 major networks (ABC,
NBC, CBS, FOX) as well as Warner Bros.  and UPN. The Sinclair  partnership  will
afford  the  Company  many  unique   opportunities,   in  television  and  radio
advertising (including  infomercial production and broadcasting),  editorial and
public relations coverage, and even product development.  The financial strength
and support of Sinclair is also proving to be a major benefit to BeautyBuys.com,
Inc.,  and will be  leveraged  by  BeautyBuys  to attract  other media  partner.
Sinclair is the largest  FOX & WB  affiliates  network in the US. (see 8-K filed
December 7, 1999)

     BeautyBuys.com's  website design work is  proprietary.  It was developed to
accommodate  the  specific  marketing  and record  keeping  requirements  of the
Company.  State-of-the-art  technology  is  utilized  in site  design,  tracking
systems,  hosting  and  affiliated  programs.   BeautyBuys.com  strives  through
internal   development  efforts  on  creating  and  enhancing  the  specialized,
proprietary software that is unique to its Business.

     BeautyBuys.com  utilizes  a  proprietary  computerized  web based  database
management  system  that  collects,  integrates  and  allows  analysis  of  data
concerning   sales,   order   processing,   shipping,   purchasers,   receiving,
inventories,  and  financial  reporting.  At  any  given  time,  management  can
determine the quantity of product stored by item, cost by item,  aging and other
characteristics necessary for expeditious fulfillment and distribution.

                                      -4-

<PAGE>

     BeautyBuys.com  has  implemented  a broad array of services and systems for
site management,  searching,  customer interaction,  transaction  processing and
fulfillment.  BeautyBuys.com uses a set of software  applications for: Accepting
and validating customer orders;  Organizing,  placing,  and managing orders with
vendors and fulfillment partners; Receiving product and assigning it to customer
orders; and Managing shipment of products to customers based on various ordering
criteria.

     These services and systems use a combination of BeautyBuys' own proprietary
technologies and commercially available licensed technologies. Products acquired
for resale by BeautyBuys.com Inc. are shipped in bulk to the Company's warehouse
facility.  BeautyBuys  maintains  inventory  on  90%  of its  products  and  has
arrangements to purchase the balance of its needs on a "Just-in-time" basis. All
orders are  assembled in a single  facility for shipment to the customer via UPS
or confirmed priority mail.

     BeautyBuys'  website can be shopped 24 hours a day,  seven days a week from
anywhere  that a  consumer  has  Internet  access.  BeautyBuys  offers  a  large
selection of products and in addition provides various levels of product content
that  includes  wealth of  health-related  information,  buying guides and other
tools   designed  to  help  consumers   make  educated   purchasing   decisions.
Additionally  shopping list and e-mail  reminders are designed to make it easier
for customers to regularly purchase their preferred products.

     BeautyBuys  believes  that the breadth and depth of its product  selection,
together with the  flexibility  of its online store and its range of helpful and
useful product information and other shopping services,  enables  BeautyBuys.com
to provide a strong merchandising strategy.  BeautyBuys continues to develop its
web site through value added technologies,  strategic partnerships and marketing
programs.  To date it has developed  interest from in excess of 25,000  business
affiliates and over 30,000 on-line customers. The web site currently receives in
excess of 100,000  unique  visitors per month with the average time  visiting on
site in excess of 13 minutes.  BeautyBuys  uses  sophisticated  micro-markteting
techniques to increase its sales and enhance the customer shopping experience.

                                      -5-

<PAGE>

     BeautyBuys'  Marketing  efforts are aimed at flexibility of presentation to
attract new and repeat customers and give ease of access to product availability
and  information.  BeautyBuys'  online  store  provides  flexibility  to  change
featured products or promotions without having to alter the physical layout of a
store.  BeautyBuys.com  is also able to  dynamically  adjust its  product mix in
response  to changing  customer  demand,  new  seasons or  holidays  and special
promotions.

     BeautyBuys has the ability to offer products to individual  customers based
on their brand  preferences.  BeautyBuys  also  cross-sells  its  departments to
promote impulse buying by customers.

     BeautyBuys  has  programs  that  allow it to provide  samples  of  products
designed as personal  gifts.  BeautyBuys  also plan to use sampling to work with
manufacturers to introduce new products.

     BeautyBuys'   editorial   strategy  is  to  present  helpful,   value-added
information  to  consumers  in  a  readable,  user-friendly  format.  BeautyBuys
assembles content to provide both reference and product-related information.

     BeautyBuys competes with several online merchants including Perfumania.com,
Gloss.com,  Beauty.com,  Planet Rx,  Drugstore.com,  ibeauty.com and others.  In
addition,  BeautyBuys  competes with the  traditional  retail  market  including
department stores, chain stores and mass merchandisers.  BeautyBuys' competitors
can be divided into several groups:  chain drugstores,  such as Walgreen's,  CVS
and  Eckerd;  mass  market  retailers  such  as  Wal-Mart,   Kmart  and  Target;
supermarkets, such as Safeway, Albertson's and Kroger; warehouse clubs; and mail
order and major department stores, such as Nordstrom,  Macy's and Bloomingdales.
Each of these competitors offers one or more of the health, beauty, wellness and
personal  care  product  categories  as offered  BeautyBuys  on and  through its
website.

     At this time there is no online vendor known to BeautyBuys  that  dominates
the beauty and health care  market.  BeautyBuys  believes  that with its quality
selection, competitive pricing, advertising,  customer profiling and technology,
it can become dominant in this industry.

     Management believes that the following are principal competitive factors in
the market place wherein it operates, all of which are acknowledged to exist and
are  focused  upon in  BeautyBuys'  operations:  Brand  recognition,  Selection,
Convenience,  Price,  Website  performance and accessibility,  Customer service,
Quality of information services, Reliability and speed of order shipment.

     Administrative offices of BeautyBuys.com,  Inc. are located at 40 Underhill
Blvd.,  Syosset,  New York.  Sinclair  Broadcast  Group Inc. is located at 10706
Beaver Dam Road,  Cockeysville,  MD. 21030. The BeautyBuys web site is hosted by
Exodus Communication at Walthom, Ma. B2C retail sales of products offered direct
to the  consumer by  BeautyBuys.com  is  accomplished  under its main  corporate
identity,  and the B2B  sales of  product  is  accomplished  through  a  further
subsidiary of  BeautyBuys.com  called PHS Group Inc. PHS sells health and beauty
care and salon products and B2B products  sales will be marketed  through use of
the domain name Dealbynet.com.

                                      -6-

<PAGE>


          2.  NETCIGAR.COM

     In July 1999, the Company launched through its subsidiary NetCigar.com Inc.
a web  site  (www.netcigar.com)  for sale of  premium  cigar  products.  Through
NetCigar.com  Inc.  the  Company  offers  information  and sales on a variety of
cigars and cigar related products and content,  including cigar news and events,
editorials, and an array of cigars and cigar products of both proprietary labels
and other  popular  brands.  The  Company has our  affiliation  with a Dominican
Republic  tobacco grower and cigar  manufacurer  from where the Company receives
proprietary  label  cigars for sale on the web site of  NetCigar.com  Inc.  (see
"Distribution of Premium Cigars" infra). The Company also markets humidors,  and
sells golf oriented gifts and apparatus. The Company has a long term warehousing
arrangement  in Miami,  Florida  for storage of mainly its  proprietary  cigars.
There are no retail stores to upkeep.  NetCigar.com  Inc. is not locked into any
traditional  pricing mode for sale of its products so marketing quality products
at  significant  discounts  is  possible  and is a large  part of its  business.
NetCigar is seeking a formidable  advertising media partner similar to the model
its sister corporation (both with SYBR as the parent)  BeautyBuys.com  Inc. (see
Supra)  accomplished  with  Sinclair  Broadcasting.  NetCigar's  web  site  adds
convenience  to  customer  and  potential  customer  shopping  by being open and
available  24 hours a day,  seven days a week for access  from  anywhere  that a
consumer has internet  access.  A  significant  portion of  NetCigar's  web site
design is  proprietary  and NetCigar has had the site designed and has developed
the site to accommodate  specific  marketing and record keeping  requirements to
enhance customer service.

                                      -7-

<PAGE>

     Netcigar.com, Inc., utilizes a proprietary computerized database management
system that collects,  integrates and allows analysis of data concerning  sales,
order  processing,  procurement,  shipping,  receiving,  inventory and financial
reporting.  At any given time,  Company executives can determine the quantity of
product stored by item, cost by item, aging and other characteristics  necessary
for expeditious fulfillment and distribution.  A network system of the Company's
office and warehousing facilities allows for online assessment and transactional
reporting  capabilities.  All  consumer  orders are shipped  from the  Company's
warehouse within 3 days of order placement.  Netcigar.com maintains an inventory
on  approximately  50% of its  product  mix;  the  other 50% is  purchased  on a
just-in-time basis. The distribution facility is modular and sufficient space is
available  to handle the  Company's  anticipated  growth in this area of product
sales. After an order is shipped,  customers can view order-tracking information
on NetCigar's web site.

     As  customers  use  NetCigar's  web  site,   they  provide   NetCigar  with
information  about their buying  preferences  and habits.  NetCigar then can use
this  information  to develop  personalized  communications  and deliver  useful
information,  special offers and new product announcements to its customers.  In
addition,  NetCigar uses e-mail to alert customers to important developments and
merchandising initiatives.

     NetCigar  competes  with many and varied  sources  for cigar  products in a
market both large and highly fragmented. No single traditional retailer competes
against  the  Company  in all of its  product  lines  and  there are an array of
recently developed e-commerce cigar sites. The largest competitor, JR Cigars has
only  recently  developed  an  e-commerce  web site for its product  sales as an
adjunct to this traditional  brick and mortar retail stores and catalogue sales.
It is estimated that JR Cigars has approximately at 14% present market share. No
other competitor is known to have more than 5% market share.

                                      -8-

<PAGE>

     Traditional  pre-internet  cigar sales has evolved  through the following 4
categories  of  retailing,  which  together  remain  the  main  source  of cigar
marketing:

     1. Mom and Pop brick and mortar tobacco shops that  typically  average 2500
     square feet and generate  average annual volume of  approximately  $250,000
     per store.

     2. Chain and franchise  brick and mortar  tobacco shops that average 12,000
     to 15,000  square  feet and  generate  approximately  $5,000,000  in annual
     volume per store.

     3. Catalog and mail order  vendors  that do monthly  mailings to as many as
     500,000 customers (in some instances as few as 25,000 customers),  which is
     the portion of the market that will be the easiest to convert to E-Commerce
     purchases, and

     4. Drug stores and mass market retailers  representing less than 10% of the
     market

     The Company believes that the following are principal  competitive  factors
present  in  its  operations  and  product   presentation:   Brand  recognition,
Selection, Convenience, Price, Web site performance and accessibility,  Customer
service,  Quality  of  information  serves  and  Reliability  and speed of order
shipment.

     Many of the  Company's  store-based  and  online  competitors  have  longer
operating  histories,  larger  customer  bases,  greater brand  recognition  and
significantly   greater   financial,   marketing   and  other   resources   than
Netcigar.com. Traditional store-based retailers also enable customers to see and
feel products in a manner that is not possible  over the  Internet.  Traditional
store-based  retailers can also sell products to address immediate needs,  which
the Company and other online sites cannot do.

                                       -9-

<PAGE>

          3.  FUTURE INTERNET SITES.

     The Company plans to develop and/or partner with new e-commerce  sites that
complement its strategy of branding through media partnerships.

C.   NON-INTERNET SALES.

     The  Company  services  on a direct  store  basis  through  its  subsidiary
BeautyBuys.com  Inc and  affilated  parties  several drug store and  supermarket
chains in the Northeast  United States and numerous other retail outlets for the
sale of hair and skin care products  available to the Company  through  contacts
made in the industry. Similar products are also made available to be sold direct
to the consumer via internet  sales (see "B.  Internet  Sales"  supra).  In this
product area Company  affiliated  sources stock the designated  store shelves on
the design of the  planogram  developed by Company  affiliates  which service is
offered at no additional  charge which aspect of sales helps maintain the client
as long as awareness is maintained of and remedies for  deficiencies are made in
product  shelf  storage  as it occurs.  This  aspect of the  Company's  business
presently  accounts for only a minority of its operations and products sales and
is operated also through the Company's  subsidiary  BeautyBuys.com  Inc. through
its subsidiary PHS Group Inc.

                                      -10-

<PAGE>

D.        COMPETITION

     The  Company  is  small  in  both  physical  and  financial  attributes  in
comparison to many of its competitors in the grocery  industry health and beauty
aids, cigar, and other business areas in which it participates. Such differences
however do not act as a material  hindrance to operations in e-commerce  because
where the traditional  over the counter  retailer model of business was location
oriented,  internet sales are not burdened with such fixed  overhead.  Access to
product  remains  important  but  the  Company  is  confident  of the  continued
availability  of product from it  fulfillment  sources with whom the Company has
successfully  acquainted itself or developed in house. For further discussion of
particular competitive concerns in the e-commerce area of the Company's business
refer to the  particular  discussion  of the  internet  sales  areas of business
operations of the Company through its subsidiaries as heretofore-described  (see
B Internet Sales-BeautyBuys.com and NetCigar.com supra). The Company's knowledge
and  experience  in and  devotion  to its  business,  receptiveness  to  general
customers  and  service,  should also  continue to benefit  its  operations  and
continue to allow it to compete with its more financially endowed competitors.

                                      -11-

<PAGE>


     In the Salon and Skin  care  product  market  and that for  fragrances  and
cosmetics the primary thrust of the business, as the Company perceives it, is to
secure market share which once  established  can be maintained with good service
and maintenance of competitive pricing.  Once the particular stores are acquired
as clients and the service and price levels are  maintained,  it is difficult to
lose the account.  However,  special  circumstances beyond the Company's control
such as acquisitions, other financial events, among others may cause the Company
to lose customers.

     In  internet  sales  the  Company  competes  to  obtain  its  product  from
manufacturers also supplying competing distributors. The leveling factor appears
to be service and exposure on the internet. The Company is striving for expanded
internet  exposure and prides  itself in offering  good prices and service.  The
expanding  presence  of the  Company  on the  Internet  should  act as a further
balancing  factor  because of the  enhancement  of selling  efforts  such allows
without  the need for any  corresponding  expansion  of the  Company's  physical
business facilities and personnel.

E.       INFORMATION SYSTEMS

     The various web sites established for sale of the Company's products are of
multi-tier  construction to allow for ease of administration and record keeping.
Behind the screen  visible to the consumer when  visiting the Company's  various
product   category   websites  are  internet  based   marketing  and  accounting
information  programs  to allow  the  Company  to review  interest  shown in its
websites and account for sales made  therefrom.  The Company also  maintains its
own websites  regarding  information  on the Company as a public  entity and its
various business interests. Internet sites presently available regarding Company
business and product sales are:

                                 BeautyBuys.com
                                  NetCigar.com
                                SynergyBrands.Com
                                 DealbyNet.com

                                      -12-

<PAGE>

     The Company utilizes a proprietary computerized data base management system
which  collects,  integrates and allows for analysis of data  concerning  sales,
order processing,  shipping, purchasers,  receiving,  inventories, and financial
reporting.  At any given time the Company is able to  determine  the quantity of
product stored by item, Company costs, age and other  characteristics  necessary
for expeditious  distribution.  The system provides for system networking of the
Company's  various offices and warehousing and allows for on-line  transnational
reporting capabilities. The Company (through its revelant subsidiaries) programs
the web  sites  maintained  by  those  subsidiaries  in Cold  Fushion  and  Java
utilizing a Windows NT platform and SQL 7 Database  software.  The Company's web
based  systems  are  hosted  by  Exodus   communications   utilizing   redundant
sophisticated  due processing  servers.  Communications  is provided by UUNET on
proprietary T-1 and leased T-3 facilities.  The Company's  intranet is protected
by Verisign and its RSA infrastructure.

F.   SEASONALITY

     Sales of beauty care products and fragrances increase over traditional gift
giving  holidays such as  Christmas,  Easter,  Mother's  Day,  Father's Day, and
Valentine's Day.

     Cigar  products  sales also  increase  during  holiday  periods  and summer
months, but also sales spurts occur during periods of special sporting events.

                                      -13-

<PAGE>

G.        SHIPPING AND HANDLING

     Products  sold on a B2B  basis by the  Company  are  shipped  in bulk  from
inventory  maintained  by the  Company  at its  warehouse  facilities  by common
carriers,  unless alternative  arrangements are made to have the product shipped
using another service (e.g. postal carrier or UPS) the cost of which is added to
the  acquisition  cost of the  product  to the  purchaser.  All B2C  orders  are
consolidated in a single facility then packed and shipped to the customer within
7 days mainly by UPS.  Approximately  90% of product  inventory  is in warehouse
stock and 10% is  purchased by the Company on an as needed "just in time" basis.
The Company does not own its trucks and is  dependent on common  carriers in the
trucking  industry.  Although  the Company can call upon any of several  hundred
common  carriers to  distribute  its  products,  from time to time the  trucking
industry  is subject to strikes or work  stoppages,  which could have a material
adverse effect on the Company's  operations if alternative modes of shipping are
not then available.  Additionally,  the trucking  industry is subject to various
natural  disasters which can close  transportation  lanes in any given region of
the country.  To the extent  common  carriers are  prevented  from or delayed in
utilizing  local  transportation  lanes,  the Company  will likely  incur higher
freight costs due to the limited  availability  of trucks during any such period
that transportation lanes are restricted.

     The  Company  generally  purchases  Promotional  Grocery  Products  and HBA
products for its promotional  business to be sold B2B in truckload quantities to
take advantage of better pricing from the supplier and lower freight costs.  The
Company  does not foresee  difficulty  in  arranging  additional  trucking if it
increases its business volume. The Company has arranged for warehousing when and
where necessary, on a contract basis and has thereby eliminated the existence of
and need for centralized warehousing.

H.       TRADEMARKS, LICENSES AND PATENTS

     The  Company  has  obtained  rights  to  various  copyrights,   trademarks,
tradenames,  and domain names in its internet business. The Company has obtained
a wholesale  pharmaceutical  license  through the New York State  Department  of
Education,  but to date has not utilized it. The Company has worldwide rights to
the   "Suarez   Gran    Reserva",    "Breton    Legend",    "Anduleros",    "Don
Otilio","Alminante"  "Nativo"  and various  other trade  names in  marketing  of
premium  handmade  cigars.  The cigar  tradenames are owed by Gran Reserve Corp.
Others are owned directly by the Company or where  applicable and appropriate by
BeautyBuys.com Inc.

                                      -14-

<PAGE>


I.       EMPLOYEES

     The Company and its  subsidiaries  in the  aggregate as of the date of this
report  employ and contract 35 full  time/part  time persons all of whom work in
executive,  administrative,  marketing, data processing,  accounting or clerical
activities and certain work as Company employees that integrate with the various
warehouses where Company  products are stored.  The Company does lease and staff
its warehouse in New Jersey from where it facilitates storage,  sorting, packing
and  shipping  of  products  sold  in its  BeautyBuys.com  web  site.  Otherwise
warehousing  is  contracted  on an as needed  arrangement  staffed  through  the
warehousing entity contracted with except for supervisory personnel hired by the
Company.

J.  GOVERNMENT REGULATION

         1.  TOBACCO INDUSTRY REGULATION AND TOBACCO INDUSTRY LITIGATION

     Regulation. The tobacco industry is subject to regulation at federal, state
and local  levels.  Federal law has  required  States,  in order to receive full
funding for federal  substance abuse block grants, to establish a minimum age of
18  years  for the  sale  of  tobacco  products,  together  with an  appropriate
enforcement  program.  The recent trend is toward  increasing  regulation of the
tobacco  industry,  and the  increase in  popularity  of cigars could lead to an
increase in regulation of cigars.

     The Food and Drug  Administration  (the "FDA") has determined that nicotine
is a drug and that it has  jurisdiction  over  cigarettes and smokeless  tobacco
products,  as  nicotine-delivering  medical devices, and therefore,  promulgated
regulations  restricting and limiting the sale,  distribution and advertising of
cigarette and smokeless tobacco products.  Cigars were not included in the FDA's
regulations.  The  prohibition on retailers from selling  cigarettes,  cigarette
tobacco  or  smokeless  tobacco  to  persons  under the age of 18 and  requiring
retailers to check the photographic identification of every person under the age
of 27 became effective on February 28, 1997.

     The FDA is continuing its efforts to increase  regulation  over tobacco and
tobacco-related  products.  Its efforts  however  were  forestalled  by a recent
decision  in the Fourth  Circuit of the U.S.  Court of Appeals  where that court
ruled that the FDA lacks  jurisdiction to regulate  tobacco  products and struck
down all the provisions of the FDA's  regulations  over tobacco product use (See
BROWN & WILLIAMSON  V. FDA,  153 f.3d 155 (4th Cir.  1998).  The Fourth  Circuit
denied a U.S.  Department  of Justice  petition for rehearing by the Panel or en
banc. The Solicitor General filed a petition for a writ of certiorari requesting
the U.S. Supreme Court review the decision of The Fourth Circuit but a ruling on
the  petition  has not yet been given but is  expected in the near  future.  The
FDA's age and  identification  regulations  will  remain in effect  pending  the
outcome of this litigation.

     The U. S.  Department of Health and Human  Services ( the "HHS")  Inspector
General issued a report in February 1999, urging the Federal Trade Commission to
require cigars to carry warning  labels similar to those  contained on cigarette
packages.  This report marks the first time that cigars have  specifically  been
identified for increased regulatory oversight by a federal health agency.

                                      -15-

<PAGE>


     While the cigar industry has not been subject to federal regulatory efforts
to date, there can be no assurance that there will not be an increase in federal
regulation in the future against cigar  manufacturers or  distributors.  The HHS
report   indicates  that  federal   regulatory   effort  directed  toward  cigar
manufacturers  and  distributors  may be increasingly  likely.  The costs to the
Company of increased government regulations could have a material adverse effect
on the Company's business and results of operations.

     In addition, the majority of states restrict or prohibit smoking in certain
public  places and  restrict  the sale of  tobacco  products  to  minors.  Local
legislative  and  regulatory  bodies  have also  increasingly  moved to  curtail
smoking by  prohibiting  smoking in certain  buildings  or areas or by requiring
designated  "smoking" areas. Further restrictions of a similar nature could have
an adverse effect on the sales or operations of the Company.  Numerous proposals
also have been  considered at the state and local level  restricting  smoking in
certain  public  areas,  regulating  point of sale  placement  and promotion and
requiring warning labels.

     Federal law has required  health  warnings on cigarettes  since 1965 and on
smokeless  tobacco  since  1986.  Although  there is no  federal  law  currently
requiring  that  cigars or pipe  tobacco  carry such  warnings,  California  has
enacted legislation  requiring that "clear and reasonable"  warnings be given to
consumers  who are exposed to  chemicals  known to the State to cause  cancer or
reproductive  toxicity,  including  tobacco smoke and several of its constituent
chemicals.  Violations  of this law,  known as  Proposition  65, can result in a
civil penalty not to exceed $2,500 per day for each violation.  Although similar
legislation has been introduced in other states, the Company is not aware of any
action  taken.  There can be no assurance  that such  legislation  introduced in
other  states  will not be passed in the  future or that other  states  will not
enact  similar  legislation.  Consideration  at both the federal and state level
also has been given to  consequences of tobacco on others that are not presently
smoking  (so-called  "second-hand"  smoke).  There  can  be  no  assurance  that
regulations  relating  to  second-hand  smoke  will not be  adopted or that such
regulations or related  litigation  would not have a material  adverse effect on
the Company's results of operations or financial condition.

     Increased  cigar  consumption  and the  publicity  that such  increase  has
received  may  increase  the  risk of  additional  regulation.  There  can be no
assurance  as to the  ultimate  content,  timing,  or effect  of any  additional
regulation of tobacco products by any federal,  state, local or regulatory body,
and there can be no assurance that any such  legislation or regulation would not
have a material adverse effect on the Company's business.

     Litigation.   Historically,   the  cigar  industry  has  experienced   less
health-related  litigation than the cigarette and smokeless  tobacco  industries
have experienced.

                                      -16-

<PAGE>

     Litigation  against the cigarette industry has historically been brought by
individual  cigarette  smokers.  In 1992,  the  United  States  Supreme  Curt in
Cippollone v. Liggett  Group,  Inc. ruled that federal  legislation  relating to
cigarette  labeling  requirements  preempts  claims  based  on  failure  to warn
consumer  about the health  hazards of cigarette  smoking,  but does not preempt
claims based on express warranty,  misrepresentation,  fraud, or conspiracy.  To
date,  individual  cigarette smokers' claims against the cigarette industry have
been generally unsuccessful.

     Current tobacco litigation  generally falls within one of three categories:
class actions,  individual actions (which have been filed mainly in the State of
Florida) or actions brought by individual  states  generally to recover Medicaid
costs allegedly attributable to tobacco-related  illnesses.  The pending actions
allege a broad range of injuries  resulting from the use of tobacco  products or
exposure to tobacco smoke and seek various remedies, including compensatory and,
in some cases,  punitive damages together with certain types of equitable relief
such as the establishment of medical monitoring funds and restitution. The major
tobacco companies are vigorously defending these actions.

     In May 1996,  the Fifth  Circuit  Court of Appeals  in Castano v.  American
Tobacco,  et al.  reversed  a  Louisiana  District  Court's  certification  of a
nationwide class consisting essentially of nicotine dependent cigarette smokers.
Notwithstanding  the dismissal,  new class actions  asserting  claims similar to
those in  Castano  have  recently  been filed in certain  states.  To date,  two
pending class actions against major cigarette manufacturers have been certified.
The first  case is  limited  to  Florida  citizens  allegedly  injured  by their
addiction to  cigarettes;  the other is limited to flight  attendants  allegedly
injured through exposure to second-hand smoke.

     The tobacco industry  recently  negotiated  settlements  totaling more than
$240  billion  with  the  states  seeking   reimbursement  for  expenditures  by
state-funded medical programs for treatment of tobacco related illnesses.

                                      -17-

<PAGE>

     Recent  reports  indicate  that the federal  government  intends to sue the
tobacco  industry  seeking  reimbursement  for  billions  of  dollars  spent  by
government  held  programs  to  treat  smoking-related   illnesses.   A  federal
government  task  force  has been  formed to make a  recommendation  to the U.S.
Justice  Department  on when and  where to file the  lawsuit.  Furthermore,  the
inability  of the federal  government  to obtain a portion of the funds from the
state  settlements  with the tobacco  industry may increase  the  likelihood  of
federal government litigation against the industry.  The litigation could have a
material  adverse  affect on the  profitability  of tobacco and tobacco  related
products.

     While the cigar  industry  has not been  subject to similar  health-related
litigation to date, there can be no assurance that there will not be an increase
in  health-related  litigation  in the future  against  cigar  manufacturers  or
distributors.  The costs to the Company of defending  prolonged  litigation  and
settlement or successful prosecution of any health-related litigation could have
a material adverse effect on the Company's business and results of operation.

          2.  MISCELLANEOUS GOVERNMENT REGULATION.

     The United  States Food and Drug  Administration  through the United States
Food,  Drug and Cosmetic Act and the Fair  Packaging  and Labeling Act and other
various  rules and  regulations  regulate,  among other  things,  the purity and
packaging  of HBA  products and  fragrances  and  cosmetic  products and various
aspects of the  manufacture  and  packaging of other  grocery  items sold by the
Company.  Similar  statutes are in effect in various states.  Manufacturers  and
distributors  of such  products  are also  subject  to the  jurisdiction  of the
Federal Trade Commission with respect to such matters as advertising content and
other  trade  practices.   To  the  Company's  knowledge,  it  only  deals  with
manufacturers  and  manufactured  products in a manner which  complies with such
regulations   and  who   periodically   submit  their  products  to  independent
laboratories for testing. However, the failure by the Company's manufacturers or
suppliers  to comply with  applicable  government  regulations  could  result in
product recalls that could adversely affect the Company's relationships with its
customers. In addition, the extent of potentially adverse government regulations
which might arise from future  legislation  or  administrative  action cannot be
predicted.  The  Company  is not  aware of any  government  regulation  directly
related to internet  sales  different  from  traditional  marketing  but immense
interest has been  indicated  on policing  the internet  focusing on contact and
access but the nature of the products  marketed by the Company over the internet
does not appear to involve any of such  concerns  beyond  product  labeling  and
advertising  content  which  would apply  regardless  of the medium in which the
products are sold.

                                      -18-

<PAGE>

ITEM 2:  PROPERTIES

     The Company's corporate offices and administrative headquarters are located
in Syosset, New York.

     The  Company  maintains  satellite  offices in  Pennsylvania,  New  Jersey,
Florida and the Dominican Republic.

     Product  warehousing  when necessary is done on a contract basis per pallet
of product stored and is stored in modular public  warehouses  primarily located
in New Jersey, and Ohio but also various other facilities. The Company stores at
its expense grocery, and health and beauty aids products which the Company sells
in bulk to further  wholesalers  and retail outlets  independent of the Company.
The  Company  has  standing  orders  with  independent  product  sources for the
availability of and delivery of product to the Company which is not to be resold
in bulk and to  accommodate  the sales of  product  direct to the  consumer  via
internet  sales  where  shipping  of  product to  fulfill  orders for  consumers
requires  diversity of products  shipped in each package as ordered.  Certain of
the more popular  products,  as viewed from the concentration of internet orders
for such  products,  are  warehouse  stored for the  Company in the  warehousing
facilities more adapted to the "pick and pack" retrieval and shipping  character
of consumer  internet sales practices of the Company.  The main such warehousing
facility is located in New Jersey where the Company leases  approximately 40,000
square feet of predominately  product storage space and to a lesser extent space
for product order packing and warehouse  administrative  offices.  Otherwise the
Company  arranges to have the products shipped directly to the consumer from the
manufacturer using standard delivery services and/or the US postal service which
cost is built  into the  price  charged  for the  product  and that  paid by the
Company to the manufacturer.  Currently the Company maintains  warehousing space
under the  above  referenced  arrangements  in New  Jersey  for  warehousing  of
products to be sold  wholesale in bulk and for  internet  and other  specialized
sales. There are also several humidified warehouses in Florida and the Dominican
Republic to store cigars supervised by Company officials and several  warehouses
in the Dominican  Republic to store raw tobacco for cigar  production  which are
independently operated.

ITEM 3:  LEGAL PROCEEDINGS

     The Company is a party to a number of legal proceedings as either plaintiff
or defendant  in  connection  with claims made for goods sold and various  other
aspects  of its  business,  all  of  which  are  considered  routine  litigation
incidental to the business of the Company. The Company is not aware of any other
litigation  pending which might be  considered  material and not in the ordinary
course of business.

     No other legal  proceedings were terminated during the fiscal quarter ended
December 31, 1999 (other than routine  litigation  incidental to the business of
the Company).

ITEM 4:  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     During the fourth quarter of 1999 no matters were submitted for shareholder
approval during the fourth quarter.

                                      -19-

<PAGE>


                                     PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
         STOCKHOLDER MATTERS

     The  Company's  common  atock  trades on NASDAQ  Small Cap under the Symbol
"SYBR",  and on the Boston Stock  Exchange  under the Symbol  "SYN".  The NASDAQ
Stock Market,  which began  operation in 1971, is the world' . first  electronic
securities  market  and the  fastest  growing  stock  market in the U.S.  NASDAQ
utilizes today's information  technologies -computer and  telecommunications- to
unite its participants in a screen-based,  floorless  market.  It enables market
participants  to compete  with each  other for  investor  orders in each  NASDAQ
security  and   surveillance  of  thousands  of  securities.   This  competitive
marketplace,  along with the many products and services available to issuers and
their  shareholders,  attracts today's largest and fastest growing  companies to
NASDAQ.   These  include   industry   leaders  in   computers,   pharmaceutical,
telecommunications,  biotechnology,  and financial  services.  More domestic and
foreign  companies list on NASDAQ than on all other U.S. stock markets combined.
The high and low sales prices in the NASDAQ  Small Cap Market for the  Company's
Common  Stock,  as  reported  by the  NASDAQ  for  each of the  quarters  of the
Company's two most recent fiscal years are as follows:

COMMON STOCK

Quarter Ended               High              Low
-------------             -------           -------
March 31, 1998               2.50             1.63
June 30, 1998                3.00             1.38
September 30, 1998           1.75              .38
December 31, 1998            3.13              .28
March 31, 1999               6.47             2.19
June 30, 1999                4.13             1.79
September 30, 1999           2.10              .89
December 31, 1999            4.63             1.28
March 31, 2000               4.13             2.41

     On March 31, 2000, the Company had approximately 14,455,616 shareholders of
record,  with much of the  stock  being  held in street  name.  The  Company  is
currently listed on NASDAQ Small Cap.

     The Company has never paid any  dividends  on its Common Stock and does not
presently  intend to pay any  dividends on the Common  Stock in the  foreseeable
future.

                                      -20-

<PAGE>


ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN
         OF OPERATIONS

OVERVIEW

     Synergy  Brand's (SYBR or the  "Company")  Internet  strategy  includes the
internal  development  and  operation of  subsidiaries  as well as the taking of
strategic positions in other Internet companies that have demonstrated synergies
with SYBR's core businesses.  The Company's strategy also envisions and promotes
opportunities  for  synergistic   Business   relationships  among  the  Internet
companies within its portfolio.  Synergy Brands,  Inc.  (NASDAQ:  SYBR) develops
Internet  properties that strategically  partner with off-line and on-line media
companies to capture  e-commerce  markets within the Internet arena. The company
has  developed  the  following  web  sites:  Netcigar.com,   BeautyBuys.com  and
DealByNet.com.

     SYBR's subsidiaries include BeautyBuys.com,  Netcigar.com, Dealbynet.com as
well as PHS Group.  BeautyBuys.com  is a leading  online  Business  to  consumer
beauty  department  store  consisting of 7,000 unique brands.  Dealbynet.com  is
SYBR's  supply chain  integration  model for its  Business-to-Business  platform
being  developed  in the  Health  and  Beauty  as  well as  grocery  businesses.
Netcigar.com  is a leading  online  retailer of premium cigars and other related
luxury  items.  PHS is the  Company's  fulfillment  platform  for  its  Internet
operations.  The  facility  allows for  automated  order  processing,  inventory
management and customer service.


                                      -21-

<PAGE>

     The  Company has  adopted a strategy  of seeking  opportunities  to realize
gains through  investments or having separate  subsidiaries or affiliates buy or
sell minority  interests to outside  investors.  The Company  believes that this
strategy  provides the ability to increase  shareholder value as well as provide
capital to support the growth in the Company's subsidiaries and investments. The
Company  expects to continue to develop and refine the  products and services of
its  businesses  focusing on the internet as the primary  mode of  distribution,
with the goal of increasing revenue as new Products are commercially introduced,
and to continue to pursue the  acquisition of or the  investment in,  additional
Internet  companies.  The Company  will seek to continue to attract  traditional
media  investments,  partner with advanced value added technologies that will be
synergistic to its internet  platforms as well as partner with existing internet
companies  to achieve its goals of building a  strategic  portfolio  of internet
assets.

RESULTS OF OPERATIONS

     The following  table sets forth selected  operational  data of the Company,
expressed as a percentage of revenues for the periods indicated below:

                            Years Ended December 31,

                          1995        1996     1997     1998         1999
                          ----        ----     ----     ----         ----

Revenues                100.0%      100.0%   100.0%    100.0%      100.0%

Cost of Sales           (87.9)     (106.2)   (77.8)    (88.6)      (88.2)

Operating Expenses       (8.1)      (12.6)   (17.2)    (10.0)      (59.0)


Other Income (expense)   (1.6)       (2.7)     0.5        1.4       (.02)
                          ----       ----     ----       ----       -----
Income(loss)from
Operations Before
Income Tax               2.4       (21.5)     5.5        2.8       (48.1)

Income Tax
(Expense)Benefit        (0.8)       (0.3)     --         (.1)         --

Discontinued Operations (0.3)     (129.9)    (2.4)         0          --
Extraordinary Item       --          --        --         --          --
                        ----        ----      ----     -----        ----

Net Income(Loss)         1.3%     (151.7)%    3.1%      2.7%      (48.1)

                                      -22-

<PAGE>


                          YEAR ENDED DECEMBER 31, 1999
                    COMPARED TO YEAR ENDED DECEMBER 31, 1998.

     Internet sales for its first year of operations  grew to $3.1 million.  The
Company's total revenues in 1999 grew by 19% to $13.1 million as compared to $11
million in 1998. Internet sales for the 4th Quarter of 1999 reached $2.5 million
as  compared  to no Internet  revenues  for the same period in 1998.  In the 4th
quarter 1999 the Company converted its revenue platforms to web based systems as
part of its 50% sale of equity interest in BeautyBuys.com to Sinclair  Broadcast
Group (NASDAQ:  SBGI).  The Company  Reported a net loss of $741,682 or $.07 per
share  before  acquisition  related  and  non-cash  charges  in 1999  (including
one-time  charges  related  to the  Sinclair  deal  and site  development  costs
totaling  $5.6  million.  The Company  reported a $6.3  million loss or $.67 per
share.) for 1999.

                                                   1999           1998

Internet Sales                              $ 3,157,745    $         -
Non-internet sales                          $10,023,494    $11,055,549
Total Sales                                 $13,181,239    $11,055,549
Acquisition related and non-cash charges (a)  5,600,000              -
Net Profit (loss) before one time charges      (741,682)       297,508
Per share                                         (0.07)          0.06
Net Profit (loss)                            (6,341,682)       297,508
Per share                                         (0.67)          0.06
Weighted share outstanding                   10,445,835      5,624,590

     (a) Includes $4.4 million  acquisition  related  charges in connection with
the Sinclair  Broadcast Group acquisition of a 50% interest in BeautyBuys.com in
November, 1999 and $1.2 million Investment in the site designs of BeautyBuys and
net cigar.


                                      -23-

<PAGE>


                           YEAR ENDED DECEMBER 31, 1998
                    COMPARED TO YEAR ENDED DECEMBER 31, 1997

     Revenues  increased  by 120.7% to $11.01  million as  compared to the prior
year.  The Company  attributes  the  increase to a  significant  increase in the
grocery  and health and beauty aid (HBA)  businesses;  as a result of  increased
business with Proctor & Gamble in particular.

     Net  income   applicable  to  common  stock   increased   from  a  loss  of
$(50,090)(-.03  per  share)  to a profit  of  $297,508  ($.06  per  share).  The
Company's profit is attributable to the following factors:

         (a)      a significant reduction in financing costs.

         (b)      a significant increase in revenues

         (c)      elimination   of  losses  in  connection   with   discontinued
                  operations.

     The Company's  income was reduced by a one time charge in  connection  with
rebate  adjustments  in the  amount  of  $220,000  and  other  charges  totaling
$199,000.

     In 1999 the Company developed  E-commece sites for the purpose of expanding
its  distribution to the consumer market through on-line  channels.  The Company
devotes a significant  amount of resources and may require additional capital to
achieve its goals.

                                      -24-

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

     The Company's  working capital  decreased to $753,000 at December 31, 1999.
The drop in  working  capital  is  attributable  to  increased  advertising  and
development  costs prior to the  completion  of the  Sinclair  acquisition  (see
BeautyBuys).  The company  utilized  its  resources  to repay its debt and as of
December 31 reduced its total debt from  $1,875,000 to $615,000.  Operationally,
the company  incurred a $6.3 million loss in 1999. $5.6 million of that loss was
one time non-cash and non-recurring  charges in connection with the development,
marketing and acquisition of the Company's Internet sites.

     As a result of the Sinclair transaction, the company expects that the $69.4
million in  advertising  credits  utilized by  BeautyBuys.com  will  support its
continuing  advertising  expenses.  The company's main  operating  subsidiaries,
BeautyBuys.com  Inc. and  SYBR.com  are  expected to incur  losses in 2000.  The
company  believes that it has sufficient  working  capital and resources to grow
and expand the businesses of its operating  subsidiaries.  However, there can be
no  assurances  that  additional  capital would not be required in the event the
Company's business grows beyond its operating budgets.

     The  Company  plans to  continue  to  partner  with  media  and  technology
companies on a media for equity basis.  The Company  believes that this strategy
allows  its  operating   subsidiaries  to  brand  and  expand  their  respective
franchises  without  causing  adverse  ramifications  on the  Company's  working
capital.  In addition the Company  plans to leverage its media assets to acquire
interests in related companies that would complement its expansion strategy.

SEASONALITY

     The Company generally  experiences lower sales volume in the fourth quarter
due to the reduced number of selling days resulting  from the  concentration  of
holidays in the quarter.

     Sales of beauty care products and fragrances increase over traditional gift
giving  holidays such as  Christmas,  Easter,  Mother's  Day,  Father's Day, and
Valentine's Day.

     Cigar  products  sales also  increase  during  holiday  periods  and summer
months, but also sales spurts occur during periods of special sporting events.

INFLATION

     The Company believes that inflation, under certain circumstances,  could be
beneficial to the Company's business.  When inflationary pressures drive product
costs up, the  Company's  customers  sometimes  purchase  greater  quantities of
product  to  expand  their   inventories  to  protect  against  further  pricing
increases.  This enables the Company to sell greater quantities of products that
are sensitive to inflationary pressures.

     However,  inflationary  pressures frequently increase interest rates. Since
the Company is  dependent  on  financing,  any  increase in interest  rates will
increase the Company's credit costs, thereby reducing its profits.

                                      -25-

<PAGE>

FORWARD LOOKING INFORMATION AND CAUTIONARY STATEMENTS

     Other than the factual matters set forth herein,  the matters and items set
forth in this  report are  forward-looking  statements  that  involve  risks and
uncertainties.  The  Company's  actual  results may differ  materially  from the
results discussed in the forward-looking statements. Factors that could cause or
contribute to such differences include, but are not limited to, the following:

         1.       INTERNET

     The  internet  environment  is new to  business  and is subject to inherent
risks as in any new developing business including rapidly developing  technology
with which to attempt to keep pace and level of acceptance and level of consumer
knowledge regarding its use.

         2.       CASH FLOW.

     The Company has  experienced  cash  shortages  which  continue to adversely
affect its business. See "Liquidity and Capital Resources". The Company requires
additional working capital in order to maintain and expand its business.

         3.       DEPENDENCE ON PUBLIC TRENDS.

     The  Company's  business  is subject to the  effects of  changing  customer
preferences  and the  economy,  both of which are  difficult to predict and over
which the Company has no control.  A change in either consumer  preferences or a
down-turn in the economy may affect the Company's business prospects.

         4.       POTENTIAL PRODUCT LIABILITY.

     As a participant in the  distribution  chain between the  manufacturer  and
consumer,  the  Company  would  likely be named as a  defendant  in any  product
liability  action  brought by a consumer.  To date, no claims have been asserted
against the Company for products liability; there can be no assurance,  however,
that such claims will not arise in the future.  Currently,  the Company does not
carry  product  liability  insurance.  In the event that any products  liability
claim is not fully funded by insurance,  and if the Company is unable to recover
damages  from the  manufacturer  or  supplier  of the  product  that caused such
injury,  the  Company  may be required to pay some or all of such claim from its
own funds. Any such payment could have a material adverse impact on the Company.

        5.       RELIANCE ON COMMON CARRIERS.

     The  Company  does  not  utilize  its own  trucks  in its  business  and is
dependent, for shipping of product purchases, on common carriers in the trucking
industry.  Although  the Company  uses  several  hundred  common  carriers,  the
trucking  industry  is subject to strikes  from time to time,  which  could have
material  adverse  effect on the Company's  operations if  alternative  modes of
shipping  are  not  then  available.   Additionally  the  trucking  industry  is
susceptible to various natural disasters which can close transportation lanes in
any given region of the country.  To the extent  common  carriers are  prevented
from or delayed in utilizing local transportation lanes, the Company will likely
incur higher freight costs due to the limited  availability of trucks during any
such period that transportation lanes are restricted.

                                      -26-

<PAGE>


         6.       COMPETITION.

     The Company is subject to  competition  in all of its various  product sale
businesses.  While  these  industries  may be  highly  fragmented,  with  no one
distributor  dominating  the  industry,  the  Company is subject to  competitive
pressures from other distributors based on price and service and product quality
and origin.

         7.       LITIGATION

     The Company is subject to legal  proceedings  and claims which arise in the
ordinary  course of its business.  In the opinion of  management,  the amount of
ultimate  liability with respect to these actions will not materially affect the
financial  position,  results of  operations  or cash flows of the Company,  but
there can be no assurance as to this.

         8.       POSSIBLE LOSS OF NASDAQ SMALL CAP LISTING.

     Synergy  currently  qualifies  for trading on the Nasdaq  Small Cap system.
Nasdaq has adopted,  and the  Commission  has approved,  certain  changes to its
maintenance  requirements  which  became  effective  as of  February  28,  1998,
including  the  requirement  that a stock listed in such market have a bid price
greater than or equal to $1.00.  The bid price per share for the Common Stock of
Synergy  has been below $1.00 in the past and the Common  Stock has  remained on
the Nasdaq Small Cap System  because  Synergy has complied with the  alternative
criteria  which are now  eliminated  under the new rules.  If the bid price dips
below $1.00 per share,  the Common Stock could be delisted from the Nasdaq Small
Cap System and  thereafter  trading would be reported in the NASD's OTC Bulletin
Board or in the "pink  sheets." In the event of delisting  from the Nasdaq Small
Cap  System,  the Common  Stock  would  become  subject to rules  adopted by the

                                      -27-

<PAGE>

Commission regulating broker-dealer practices in connection with transactions in
"penny  stocks." The  disclosure  rules  applicable  to penny  stocks  require a
broker-dealer, prior to a transaction in a penny stock not otherwise exempt from
the rules, to deliver a standardized  list disclosure  document  prepared by the
Commission that provides information about penny stocks and the nature and level
of risks in the penny stock market. In addition, the broker-dealer must identify
its role, if any, as a market maker in the particular stock, provide information
with respect to market prices of the Common Stock and the amount of compensation
that the broker-dealer will earn in the proposed transaction.  The broker-dealer
must also provide the customer  with certain other  information  and must make a
special written  determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's  written agreement to the transaction.
Further,   the  rules  require  that  following  the  proposed  transaction  the
broker-dealer  provide the customer with monthly account  statements  containing
market  information  about  the  prices  of  the  securities.  These  disclosure
requirements  may have the effect of reducing  the level of trading  activity in
the secondary  market for a stock that becomes subject to the penny stock rules.
If the Common Stock became subject to the penny stock rules, many broker-dealers
may be unwilling to engage in transactions in the Company's  securities  because
of the added  disclosure  requirements,  thereby  making it more  difficult  for
purchasers of the Common Stock to dispose of their shares.  The Company's common
stock has  consistently  remained at NASDAQ  trading levels above $1 bidover the
past year and such  historical  stability  combined with the Company  increasing
business share in the market and its continuing  establishment as a viable force
in the industries  wherein it participates gives the Company confidence that its
subseptibilty  to market  deficiencies is in a much lessened state then in years
past.

                                      -28-

<PAGE>


         9.       RISKS OF BUSINESS DEVELOPMENT.

     The Company has ventured into new lines of product and product distribution
(Cigars) (1997) (salon HBA products - (1999) and internet  sales-see B (Internet
Sales)- (1998) and such product and product  distribution  lines are expected to
continue to constitute a material part of the Company's revenue stream. With the
addition  of these new product  and  product  distribution  lines the Company is
hopeful of reaching and hopefully  exceeding  prior  historic  levels of product
sales.  Because of the newness of these lines of  products to the  Company,  the
Company's  operations in these areas should be considered  subject to all of the
risks  inherent  in a  new  business  enterprise,  including  the  absence  of a
appreciable  operating  history  and the  expense  of new  product  development.
Various  problems,  expenses,  complications  and delays may be  encountered  in
connection  with the  development  of the  Company's new products and methods of
product distribution.  These expenses must either be paid out of the proceeds of
future offerings or out of generated revenues and Company profits.  There can be
no  assurance  as to the  continued  availability  of funds from either of these
sources.

         11.      RAPIDLY CHANGING MARKET MAY IMPACT OPERATIONS.

     The market for the  Company's  products is rapidly  changing  with evolving
industry standards and frequent new product introductions.  The Company's future
success will depend in part upon its  continued  ability to enhance its existing
products and to introduce  new products and features to meet  changing  customer
requirements and emerging industry  standards.  The Company will have to develop
and implement an appropriate marketing strategy for each of its products.  There
can be no assurance that the Company will successfully  complete the development
of future products or that the Company's current or future products will achieve
market  acceptance  levels conducive to the Company's fiscal needs. Any delay or
failure of these products to achieve market  acceptance  would adversely  affect
the Company's business. In addition, there can be no assurance that the products
or  technologies  developed by others will not render the Company's  products or
technologies non-competitive or obsolete.

     Management  believes actions  presently being taken to revise the Company's
operating and financial  requirements  should  provide the  opportunity  for the
Company to continue as a going concern.  However,  Management cannot predict the
outcome of future  operations  and no  adjustments  have been made to offset the
outcome of this uncertainty.

                                      -29-

<PAGE>


         12.      DEPENDENCE UPON ATTRACTING AND HOLDING.

     The Company's future success depends in large part on the continued service
of its key  technical,  marketing,  sales and  management  personnel  and on its
ability to continue to attract,  motivate and retain highly qualified employees.
Although the Company's key employees have stock  options,  its key employees may
voluntarily terminate their employment with the Company at any time. Competition
for such  employees  is  intense  and the  process  of  locating  technical  and
management  personnel with the combination of skills and attributes  required to
execute the Company's  strategy is often lengthy.  Accordingly,  the loss of the
services  of key  personnel  could  have a  material  adverse  effect  upon  the
Company's  operating  efforts and on its research and development  efforts.  The
Company  does  not  have key  person  life  insurance  covering  its  management
personnel or other key employees.

         13.      EXTENSIVE AND INCREASING REGULATION OF TOBACCO PRODUCTS
                  AND LITIGATION MAY IMPACT CIGAR INDUSTRY.

     The tobacco industry in general has been subject to extensive regulation at
the federal,  state and local levels. Recent trends have increased regulation of
the  tobacco  industry.  Although  regulation  initially  focused  on  cigarette
manufacturers,  it has begun to have a broader impact on the industry as a whole
and may focus more  directly  on cigars in the  future.  The recent  increase in
popularity  of cigars  could lead to an  increase  in  regulation  of cigars.  A
variety of bills  relating to tobacco  issues have been  introduced  in the U.S.
Congress,  including bills that would (i) prohibit the advertising and promotion
of all  tobacco  products or restrict or  eliminate  the  deductibility  of such
advertising expense,  (ii) increase labeling requirements on tobacco products to
include,  among others  things,  addiction  warnings and lists of additives  and
toxins,  (iii) shift  control of tobacco  products and  advertisements  from the
Federal Trade  Commission (the "FTC") to the Food and Drug  Administration  (the
"FDA"),  (iv) increase tobacco excise taxes and (v) require tobacco companies to
pay for health care costs incurred by the federal  government in connection with
tobacco related  diseases.  Future  enactment of such proposals or similar bills
may have an adverse  effect on the results of operations or financial  condition
of the Company.

     In addition,  a majority of states restrict or prohibit  smoking in certain
public  places and  restrict  the sale of  tobacco  products  to  minors.  Local
legislative  and  regulatory  bodies  also have  increasingly  moved to  curtail
smoking by prohibiting  smoking in certain  buildings or areas or by designating
"smoking" areas.  Further restrictions of a similar nature could have an adverse
effect on the Company's  sales or operations,  such as banning counter access to
or display of premium  handmade  cigars,  or decisions  by retailers  because of
public pressure to stop selling all tobacco  products.  Numerous  proposals also
have been considered at the state and local level restricting smoking in certain
public areas,  regulating  point of sale  placement and promotions and requiring
warning labels.

                                      -30-

<PAGE>


     Increased  cigar  consumption  and the publicity such increase has received
may increase the risk of additional  regulation.  The Company cannot predict the
ultimate  content,  timing or effect of any  additional  regulation  of  tobacco
products by any federal,  state,  local or regulatory  body, and there can be no
assurance  that any such  legislation  or  regulation  would not have a material
adverse effect on the Company's business.

     In addition  numerous tobacco  litigation has been commenced and may in the
future be instituted,  all of which may adversely  affect the cigar  consumption
and sale and may pressure  applicable  government  entities to institute further
and  stricter  legislation  to restrict  and  possibly  prohibit  cigar sale and
consumption, any and all of which may have an adverse affect on Company business
(see "Government  Regulation - Tobacco Industry  Regulation and Tobacco Industry
Litigation" supra).

         14.      RISKS RELATING TO MARKETING OF CIGARS.

     The Company  primarily will  distribute  premium  handmade cigars which are
hand-rolled and use tobacco aged over one year. The Company  believes that there
is an abundant supply of tobacco available through its supplier in the Dominican
Republic for the types of premium  handmade  cigars the Company  primarily  will
sell.  However,  there can be no  assurance  that  increases in demand would not
adversely affect the Company's ability to acquire higher priced premium handmade
cigars.

     While the cigar  industry  has  experienced  increasing  demand  for cigars
during the last several  years,  there can be no  assurance  that the trend will
continue. If the industry does not continue as the Company anticipates or if the
Company  experiences  a reduction in demand for whatever  reason,  the Company's
supplier may temporarily accumulate excess inventory which could have an adverse
effect on the Company's business or results of operations.

                                      -31-

<PAGE>


         15.      NO DIVIDENDS LIKELY.

     No dividends  have been paid on the Common Stock since  inception,  nor, by
reason  of  its  current   financial  status  and  its  contemplated   financial
requirements,  does Synergy  contemplate or anticipate paying any dividends upon
its Common Stock in the foreseeable future.

                                    PART III

     The  information  required by items  10-13 are omitted  pursuant to general
instruction  G(3) to form 10K. The Company has included this  information in its
proxy  statement to be mailed and filed with the  Commission  on or before April
30,  2000.  The annual  meeting  is  scheduled  to be in June  2000.  Such Proxy
Statement  expected  to be  filed  with the  Commission  by  April  30,  200 0is
incorporated herein by reference.

                                     PART IV

ITEM 8.   FINANCING STATEMENTS AND SUPPLEMENTARY DATA

1.       FINANCIAL STATEMENTS

     The following  financial  statements of the Company are contained in Item 8
of this Report on the pages indicated:

                                                            Page
                                                            ----

Independent Auditors Reports                                  F1

Balance Sheet -
December 31, 1999                                             F2

Statements of Operations -
Years ended December 31, 1999 and 1998                        F3

Statements of Changes in Stockholders'
Equity - Years ended December 31, 1999 and 1998               F4

Statements of Cash Flows - Years
ended December 31, 1999 and 1998                          F5-F-6

Notes to Financial Statements as of
December 31, 1999                                        F7- F17

                                      -32-

<PAGE>

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

                                 Not Applicable

ITEM 14. EXHIBITS, FINANCING STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

1.       (a) Exhibits:

         See Index to Exhibits

2.       Reports on Form 8-K

         On  December  7, 1999 the  Company  filed a current  report on Form 8-K
         dated  November  23,  1999  to  report  under  Item 5  (Acquisition  or
         Disposition of Assets) the execution by the Registrant,  BeautyBuys.Com
         Inc.,("BeautyBuys")  subsidiary of Registrant  (by way of  Registrant's
         wholly owned  subsidiary,  SYBR.com  Inc., a New Jersey  corporation of
         which   BeautyBuys  was  at  the  time  of  execution  a  wholly  owned
         subsidiary),  and Sinclair Broadcast Group Inc., a Maryland corporation
         ("Sinclair")  of two  stock  purchase  agreements  (the  "Transaction")
         whereby  Sinclair  agreed to purchase  900,000 shares of Class B Common
         Stock  of  BeautyBuys  which   represented  50%  of  the  voting  power
         outstanding in BeautyBuys,  and options (the  "Options") to purchase up
         to 8,100,000 shares of BeautyBuys,  Class A Common Stock, and 2,200,000
         of restricted common stock of Registrant, in exchange for a combination
         of cash and advertising credits for advertising on radio and television
         stations owned by Sinclair.

         There were no other reports on Form 8-K filed during the fourth quarter
         of 1999.

3.       Financial Statement Schedules
             none

                                      -33-

<PAGE>


                                   SIGNATURES


     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                              Synergy Brands Inc.



                               by /s/ Mair Faibish
                               --------------------------------
                                      Mair Faibish
                                      Executive Vice President

Dated: April 14, 2000

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities and on the dates indicated.

                               by /s/ Mair Faibish
                               ----------------------------------
                                      Mair Faibish
                                      Executive Vice President
                                      Principal Financial Officer
                                      and Director
Signed: April 14, 2000


                               by /s/ Mitchell Gerstein
                               ----------------------------------
                                      Mitchell Gerstein, Director

Signed: April 14, 2000

                                      -34-

<PAGE>

                          INDEPENDENT AUDITOR'S REPORT

The Board of Directors
Synergy Brands, Inc.


     We have  audited the  accompanying  consolidated  balance  sheet of Synergy
Brands, Inc. (formerly Krantor Corporation) and Subsidiaries (the Company) as of
December  31,  1999,  and the related  consolidated  statements  of  operations,
changes in stockholders'  equity and cash flows for the years ended December 31,
1999  and  1998.  These  financial  statements  are  the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements based on our audits.

     We conducted  our audits in accordance  with  generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our 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 financial  position of Synergy
Brands,  Inc. and  Subsidiaries  as of December 31, 1999, and the results of its
operations and its cash flows for the years ended December 31, 1999 and 1998, in
conformity with generally accepted accounting principles.

                                Belew Averitt LLP


Dallas, Texas
April 12, 2000

                                     -F-1-

<PAGE>

                      SYNERGY BRANDS, INC. AND SUBSIDIARIES

                           Consolidated Balance Sheet

                                December 31, 1999


                                     ASSETS
<TABLE>
<CAPTION>
<S>                                                                                      <C>

CURRENT ASSETS
   Cashand cash equivalents                                                     $ 1,156,032
   Accounts receivable, less allowance for doubtful accounts of $69,965             788,077
   Inventory (Note 4)                                                             1,868,572
   Other current assets                                                               6,505
                                                                                 ----------
       Total current assets                                                       3,819,186

COLLATERAL SECURITY DEPOSIT (Note 2)                                                400,900

PROPERTY AND EQUIPMENT, net (Note 3)                                                687,493

TRADE NAMES, net of accumulated amortization of $39,624 (Note 7)                  2,657,440
                                                                                 ----------
                                                                                $ 7,565,019
                                                                                 ==========
                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
   Note payable (Note 5)                                                        $   150,000
   Accounts payable and accrued expenses (Note 7)                                 2,916,338
                                                                                 ----------
       Total current liabilities                                                  3,066,338

LONG-TERM DEBT (Note 5)                                                             465,000

COMMITMENTS AND CONTINGENCIES (Note 9)                                                    -

MINORITY INTEREST (Note 6)                                                          682,394

PREFERRED STOCK OF SUBSIDIARY (Note 6)                                              160,125

STOCKHOLDERS' EQUITY (Note 7)
   Class A preferred stock - $.001 par value; 100,000 shares authorized                 100
   Common stock - $.001 par value; 29,900,000 shares authorized                      13,456
   Additional paid-in capital                                                    25,219,431
   Deficit                                                                      (18,542,575)
   Stockholders' notes receivable                                                  (331,750)
   Advertising and in-kind services receivable from stockholder (Note 7)         (3,000,000)
                                                                                 ----------
                                                                                  3,358,662

   Less treasury stock, at cost, 1,400 shares                                      (167,500)
                                                                                 ----------
       Total stockholders' equity                                                 3,191,162
                                                                                 ----------
                                                                                $ 7,565,019
                                                                                 ==========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                     -F-2-

<PAGE>

                      SYNERGY BRANDS, INC. AND SUBSIDIARIES

                      Consolidated Statements of Operations

                     Years ended December 31, 1999 and 1998


<TABLE>
<CAPTION>
<S>                                                                 <C>            <C>
                                                                   1999           1998
                                                            -----------    -----------
SALES (Note 10)                                             $13,181,239    $11,055,549

Cost of sales                                                11,631,343      9,793,590
                                                            -----------    -----------
Gross profit                                                  1,549,896      1,261,959

OPERATING EXPENSES
   Advertising and promotional                                3,428,849         46,510
   Development costs                                          1,037,587              -
   Impairment of goodwill                                     1,153,597              -
   General and administrative                                 2,075,880      1,027,040
   Depreciation and amortization                                 69,617         29,867
                                                            -----------    -----------
                                                              7,765,530      1,103,417

Operating income (LOSS)                                      (6,215,634)       158,542

Other income (expense)
   Interest income                                               78,473         95,775
   Debt forgiveness income (Note 5)                                   -        150,409
   Miscellaneous                                                 (4,505)       (1,062)
   Interest and financing expenses                             (258,122)      (68,371)
   Dividends on preferred stock of subsidiary (Note 6)          (24,500)      (24,500)
                                                            -----------    -----------
                                                               (208,654)       152,251
                                                            -----------    -----------
Income (loss) BEFORE INCOME TAXES
 AND MINORITY INTEREST                                       (6,424,288)       310,793

MINORITY INTEREST IN lOSS (Note 6)                               82,606              -
                                                            -----------    -----------
INCOME (LOSS) BEFORE INCOME TAX                             $(6,341,682)    $  310,793

Income tax expense (Note 8)                                           -         13,285
                                                            -----------    -----------
NET INCOME (LOSS)                                           $(6,341,682)    $  297,508
                                                            -----------    -----------
Income (loss) applicable to common stock                    $(6,341,682)    $  297,508
                                                            ===========    ===========

BASIC EARNINGS (LOSS) PER COMMON SHARE (Note 13)
   Income (loss) from continuing operations                 $      (.67)    $      .06
                                                            -----------    -----------
NET INCOME (LOSS) PER COMMON SHARE                          $      (.67)    $      .06
                                                            ===========    ===========
DILUTED EARNINGS (LOSS) PER COMMON SHARE                    $      (.61)    $      .05
                                                            ===========    ===========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                     -F-3-
<PAGE>

                      SYNERGY BRANDS, INC. AND SUBSIDIARIES

           Consolidated Statements of Changes in Stockholders' Equity

                     Years ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
<S>                             <C>                <C>           <C>       <C>           <C>         <C>           <C>       <C>

                                                                                                Notes
                         Class A                           Additional                           Receivable               Total
                     Preferred Stock     Common Stock      Paid-in                   Treasury   from         Stockholder Stock-
                                                                                                                         holders'
                      Shares  Amount     Shares   Amount   Capital     Deficit       Stock      Stockholders Receivables Equity
Balance at
December 31, 1997    100,000   $ 100   4,140,515  $ 4,140 $14,611,141  $(12,498,401) $(167,500) $      -      $     -   $1,949,480

Issuance of common
stock                      -      -    1,240,051    1,240     523,300             -          -            -         -      524,540

Common stock issued
in connection with
compensation plan          -      -      946,520      947     589,755             -          -            -         -      590,702

Net income                 -      -            -        -           -       297,508          -            -         -      297,508
                     -------   ----    ---------    -----  ----------   -----------   ---------   ---------    --------  ---------
Balance at
December 31, 1998    100,000    100    6,327,086    6,327  15,724,196   (12,200,893)  (167,500)           -         -    3,362,230

Issuance of common
stock                     -       -      660,686      661     468,089             -          -            -         -      468,750

Common stock issued
in connection with
compensation plan         -       -    2,877,353    2,878   3,698,986             -          -            -         -    3,701,864

Conversion of
subordinated
debentures                -       -      600,000      600     599,400             -          -            -         -      600,000

Common stock issued
in connection with
compensation plan
for notes receivable
from stockholders          -      -      790,385      790     330,960             -           -    (331,750)        -            -

Common stock issued
in connection with
stockholder receivables    -      -    2,200,000    2,200   4,397,800             -           -           - (3,000,000)  1,400,000

Net loss                   -      -            -        -           -    (6,341,682)          -           -          - (6,341,682)
                     -------   ----    ---------    -----  ----------   -----------   ---------   ---------    --------  ---------
Balance at
December 31, 1999    100,000   $100   13,455,510  $13,456 $25,219,431  $(18,542,575)  $(167,500)  $(331,750)$(3,000,000)$3,191,162
                     =======   ====   ==========  =======  ==========  ============   =========   =========   =========  =========

</TABLE>

          See accompanying notes to consolidated financial statements.

                                     -F-4-

<PAGE>

                      SYNERGY BRANDS, INC. AND SUBSIDIARIES

                      Consolidated Statements of Cash Flows

                     Years ended December 31, 1999 and 1998

<TABLE>
<CAPTION>
<S>                                                                  <C>               <C>

                                                                         1999          1998
                                                                  -----------   -----------
CASH FLOWS FROM OPERATING ACTIVITIES
   Net income (loss)                                              $(6,341,682)  $   297,508
   Adjustments to reconcile net income (loss) to net cash
    used in operating activities:
     Depreciation and amortization                                     69,617        29,867
     Amortization of loan fees                                         54,116             -
     Loss on disposal of property and equipment                            -          4,000
     Impairment of goodwill                                         1,153,597             -
     Dividends on preferred stock of subsidiary                        24,500        24,500
     Operating expenses paid with common stock                      2,062,008       456,065
     Debt forgiveness income                                                -      (150,409)
     Minority interest in loss                                        (82,606)            -
   Changes in operating assets and liabilities:
     Net (increase) decrease in:
      Accounts receivable                                          (1,862,958)   (1,892,010)
      Inventory                                                       109,797    (1,374,808)
      Promotional rebates                                                   -       270,496
      Other assets                                                     47,145        25,648
     Net increase (decrease) in:
      Accounts payable and accrued expenses                         1,431,520       431,740
                                                                  -----------   -----------
   Net cash flows used in operating activities                     (3,334,946)   (1,877,403)

CASH FLOWS FROM INVESTING ACTIVITIES
   Purchase of property and equipment                                 (47,427)      (36,524)
   Payment of collateral security deposit                            (400,900)            -
   Refund of collateral security deposit                                    -       450,000
                                                                  -----------   -----------
   Net cash flows provided by (used in) investing activities         (448,327)      413,476

CASH FLOWS FROM FINANCING ACTIVITIES
   Proceeds from debt issuance                                        865,000     1,600,000
   Payment of debt                                                   (525,000)            -
   Proceeds from issuance of common stock                           3,508,606             -
   Proceeds from issuance of common stock of subsidiary               765,000             -
                                                                  -----------   -----------
   Net cash flows provided by financing activities                  4,613,606     1,600,000
                                                                  -----------   -----------
NET INCREASE IN CASH                                                  830,333       136,073

CASH AND CASH EQUIVALENTS, beginning of year                          325,699       189,626
                                                                  -----------   -----------
CASH AND CASH EQUIVALENTS, end of year                            $ 1,156,032   $   325,699
                                                                  ===========   ===========

</TABLE>

                                     -F-5-

<PAGE>

                      SYNERGY BRANDS, INC. AND SUBSIDIARIES

                  Consolidated Statements of Cash Flows (Cont.)

                     Years ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
<S>                                                                 <C>          <C>

                                                                  1999         1998
                                                                -----------   --------
Supplemental disclosure of cash flow information

Interest paid                                                     $190,549    $ 61,523
                                                                ===========   ========
Income taxes paid                                                 $  8,273    $ 11,021
                                                                ===========   ========

Supplemental disclosure of non-cash operating,
investing and financing activities

Conversion of subordinated debentures                             $ 600,000   $      -
Non-cash issuance of common stock                                         -    659,177
Common stock issued for notes receivable                            331,750          -
Note payable offset against accounts receivable                   1,000,000          -
Stock issued for advertising and in-kind services receivable      3,000,000          -
Purchase of Proset and Gran Reserve assets applied against
collateral security deposit and accounts receivable               5,421,814          -
                                                                -----------   --------
Total non-cash operating, investing and financing activities     10,353,564   $659,177
                                                                ===========   ========

</TABLE>

          See accompanying notes to consolidated financial statements.

                                     -F-6-

<PAGE>

                      SYNERGY BRANDS, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998

1.       Organization and summary of significant accounting policies

     ORGANIZATION

     Synergy Brands,  Inc.  (Synergy),  (formerly  Krantor  Corporation) and its
subsidiaries  have  developed  and  operate  Internet  platform  operations  and
Internet-based  businesses  designed  to sell a variety of  products,  including
health and beauty  aids and  premium  handmade  cigars,  directly  to  consumers
(business to consumer)  and to businesses  (business to business).  A summary of
the related organizations and operations is provided below.

     In September 1996, Synergy formed a wholly-owned subsidiary, New Era Foods,
Inc.  (NEF),  which  represented  manufacturers,  retailers and  wholesalers  in
connection with distribution of frozen seafood,  grocery and general merchandise
products (see Note 9).

     In October 1997,  NEF formed a subsidiary,  Premium  Cigar  Wrappers,  Inc.
(PCW),  for the purpose of producing  premium  cigar  wrappers in the  Dominican
Republic.  NEF  owns  66% of  the  common  stock  and  approximately  22% of the
preferred stock of PCW (see Note 6).

     In October 1998,  NEF formed a  wholly-owned  subsidiary,  PHS Group,  Inc.
(PHS), which is a wholesale distributor of premium beauty salon products.

     In January 1999, Synergy formed a wholly-owned  subsidiary,  Sybr.com, Inc.
(Sybr),  which is engaged  in the  development  of  Internet-based  business  to
consumer  and  business to business  opportunities  focused on beauty,  personal
care,  cigars and other  consumer  products  through  its  subsidiaries,  BB and
NetCigar.com, Inc.

     In May 1999,  Sybr formed a  wholly-owned  subsidiary,  NetCigar.com,  Inc.
(NetCigar),  which is engaged in the development of  Internet-based  business to
consumer opportunities focused on cigars and related products.

     In June 1999, Sybr formed a wholly-owned subsidiary,  BeautyBuys.com,  Inc.
(BB), which is engaged in the development of Internet-based business to consumer
and  business to business  opportunities  focused on beauty,  personal  care and
other consumer products.

     In November 1999, NEF sold 100% of the  outstanding  stock of PHS to BB for
$750,000.  Further,  Sinclair Broadcast Group (SBG) acquired 2,200,000 shares of
Synergy common stock in accordance  with a stock purchase  agreement and 900,000
shares of outstanding Class B common stock (constituting 50% of the voting power
of all issued and outstanding common stock) of BB for $765,000,  all of which is
more fully described in Note 7.

     Also in November  1999,  NEF acquired all of the  outstanding  common stock
(100 shares at $.001 par value) of Gran Reserve  Corp.  (GR), a  distributor  of
handmade cigars,  (formerly  GR Cigars, Inc.)  from Tenda Foods Inc. (Tenda),  a
wholly-owned  subsidiary  of Asia Legend  Trading Co. (ALT),  a Chinese  trading
company, for $1,066,840 in a business  combination  accounted for as a purchase.
NEF then transferred all of the outstanding  common stock of GR to NetCigar.  If
GR had been  acquired at January 1, 1998,  the Company's  consolidated  1999 and
1998 revenue would have increased by $76,590 and $206,641, respectively, and the
consolidated  results of operations  would have increased by $15,841 and $7,589,
respectively.

                                     -F-7-

<PAGE>

     Finally in  November  1999,  NEF  acquired  certain  infrastructure  assets
related  to the  distribution  agreement  described  in  Note 9 for  $3,201,397,
including leasehold  improvements and equipment amounting to $350,000,  accounts
receivable  amounting  to  $520,000  and  use  of  the  Proset  trade  name  for
$2,331,397.  Such assets were  transferred  to BB in  connection  with the stock
purchase agreement more fully described in Note 7.

     PRINCIPLES OF CONSOLIDATION

     The consolidated  financial statements include the accounts of Synergy, its
wholly-owned  subsidiaries,  its majority-owned subsidiary and BB (collectively,
the Company).  All significant  intercompany accounts and transactions have been
eliminated in consolidation.

     REVENUE RECOGNITION

     The Company  recognizes  revenue at the time  merchandise is shipped to the
customer.  The Company  issues credits to the customer for any returned items at
the time the returned products are received.

     CASH AND CASH EQUIVALENTS

     The Company considers time deposits with maturities of three months or less
when purchased to be components of cash.

     MARKETABLE SECURITIES

     Management determines the appropriate  classification of its investments in
debt  and  equity  securities  at the time of  purchase  and  re-evaluates  such
determination  at each balance  sheet date. No securities  were  outstanding  at
December 31, 1999.

     INVENTORY

     Inventory  is stated at the lower of cost or market.  The Company  uses the
first-in,  first-out  (FIFO) cost method of valuing its  inventory.  All tobacco
inventory is included in current  assets in conformity  with  standard  industry
practice, not withstanding the fact that significant quantities of inventory may
be carried for several years for purposes of the curing process.

     CONCENTRATIONS OF CREDIT RISK

     Financial   instruments   that   potentially   subject   the   Company   to
concentrations  of credit risk consist  principally of cash and cash equivalents
and accounts  receivable.  The Company places its cash and cash equivalents with
financial  institutions it believes to be of high credit quality.  Cash balances
in excess of Federally insured limits at December 31, 1999 totaled $954,035. The
concentration  of credit risk with  respect to  receivables  is mitigated by the
credit  worthiness of the Company's major  customers.  The Company  maintains an
allowance for losses based upon the expected  collectibility of all receivables.
Fair value approximates carrying value for all financial instruments.

     During 1998,  the Company  primarily  distributed  its products  through an
unrelated   intermediary   and  hence,  all  revenues  were  derived  from  this
organization.  As a  result,  the  Company  had an  inherent  business  risk  in
concentrating its sales through this entity.  This distribution  arrangement was
terminated in November 1999.  Management does not believe this  transaction will
have a significant impact on future operations of the Company.

                                     -F-8-

<PAGE>

     PROPERTY AND EQUIPMENT

     Property and  equipment  are stated at cost.  Depreciation  of property and
equipment is computed using the  straight-line  method over the estimated useful
lives of the assets,  ranging  from 3 to 10 years.  Leasehold  improvements  are
amortized over the shorter of the lease term or their estimated useful lives.

     Maintenance  and repairs of a routine  nature are charged to  operations as
incurred.  Betterments and major renewals that  substantially  extend the useful
life of an  existing  asset are  capitalized  and  depreciated  over the asset's
estimated  useful life.  Upon  retirement  or sale of an asset,  the cost of the
asset and the related accumulated  depreciation or amortization are removed from
the accounts and any resulting gain or loss is credited or charged to income.

     TRADE NAMES

     Trade names consist of the "Proset" and "Gran Reserve" trade names acquired
in November 1999, which are being amortized over their expected useful lives not
to exceed 5 years.

     LONG-LIVED ASSETS

     Long-lived  assets  and  intangible  assets  are  reviewed  for  impairment
whenever events or changes in circumstances  indicate the carrying value may not
be  recoverable.  Impairment is measured by comparing the carrying  value of the
long-lived  assets to the estimated  undiscounted  future cash flows expected to
result from use of the assets and their ultimate disposition. In instances where
impairment is determined to exist,  the Company will write down the asset to its
fair value based on the present value of estimated future cash flows.

     PREFERRED STOCK OF SUBSIDIARY

     Changes in preferred  stock of the  subsidiary  are accounted for as equity
transactions  and thus no gain or loss is recognized.  Upon each new issuance of
the  subsidiary's  preferred stock, the Company will evaluate whether or not its
investment has been impaired and adjust accordingly.

     ADVERTISING

     The Company expenses advertising and promotional costs as incurred.

     INCOME TAXES

     The  Company  uses the asset and  liability  method of  computing  deferred
income taxes. In the event differences between the financial reporting bases and
the tax bases of an enterprise's  assets and liabilities  result in deferred tax
assets,  an  evaluation of the  probability  of being able to realize the future
benefits indicated by such assets is required. A valuation allowance is provided
for a portion or all of the  deferred tax assets when it is more likely than not
that such portion, or all of such deferred tax assets, will not be realized.

     EARNINGS PER SHARE

     The  Company  calculates  earnings  per  share  pursuant  to  Statement  of
Financial  Accounting  Standards No. 128,  "Earnings per Share" (SFAS 128). SFAS
128 requires dual  presentation of basic and diluted earnings per share (EPS) on
the face of the  statement  of income  for all  entities  with  complex  capital
structures,  and requires a  reconciliation  of the numerator and denominator of
the basic EPS  computation  to the numerator and  denominator of the diluted EPS
computation.  Basic EPS calculations are based on the weighted-average number of
common shares outstanding during the period,  while diluted EPS calculations are
based on the  weighted-average  of  common  shares  and  dilutive  common  share
equivalents outstanding during each period.

                                     -F-9-

<PAGE>

     MANAGEMENT ESTIMATES

     In preparing  financial  statements in conformity  with generally  accepted
accounting principles,  management is required to make estimates and assumptions
that affect the reported amounts of assets,  liabilities,  revenues and expenses
during  the  reporting  period.   Actual  results  may  vary  from  management's
estimates.

     STOCK-BASED COMPENSATION PLANS

     Statement  of  Financial  Accounting  Standards  No. 123,  "Accounting  for
Stock-Based  Compensation"  (SFAS  123),  encourages,   but  does  not  require,
companies to record  compensation  cost for  stock-based  employee  compensation
plans at fair  value.  The  Company  has  elected to  continue  to  account  for
stock-based   compensation  using  the  intrinsic  value  method  prescribed  in
Accounting  Principles  Board  Opinion No. 25,  "Accounting  for Stock Issued to
Employees" (APB 25) and related interpretations.  Accordingly, compensation cost
for stock options is measured as the excess, if any, of the fair market value of
the  Company's  stock at the date of the grant over the amount the  employees or
non-employees must pay to acquire the stock.

     NEW ACCOUNTING PRONOUNCEMENTS

     In December 1999, the  Securities  and Exchange  Commission  staff released
Staff Accounting Bulletin No. 101, Revenue  Recognition in Financial  Statements
(SAB  101),  which  provides  guidance  on  the  recognition,  presentation  and
disclosure  of  revenue  in  financial  statements.  SAB 101  did not impact the
Company's revenue recognition  policies.  In June 1998, the Financial Accounting
Standards  Board  issued  Statement of Financial  Accounting  Standards  No. 133
(SFAS No.  133),  Accounting for Derivative  Instruments and Hedging Activities.
SFAS No. 133 is effective for fiscal years  beginning  after June 15, 2000,  and
requires all  derivative  instruments  be recorded on the balance  sheet at fair
value.  Changes in the fair value of  derivatives  are  recorded  each period in
current  earnings  or  other  comprehensive  income,   depending  on  whether  a
derivative is designed as part of a hedge transaction and, if it is, the type of
hedge transaction. Management does not believe the adoption of SFAS No. 133 will
have a material effect on the consolidated  financial statements because it does
not currently hold any derivative instruments.

     RECLASSIFICATIONS

     Certain  1998  amounts  have  been  reclassified  to  conform  to the  1999
presentation.


2.   COLLATERAL SECURITY

     At December 31, 1999,  the Company had a $400,900  security  deposit with a
     major supplier, which serves as collateral for credit purchases made by the
     Company from the supplier.


3.   PROPERTY AND EQUIPMENT

     Property and equipment as of December 31, 1999 consisted of the following:

     Office equipment                               $  215,681
     Machinery and equipment                            48,825
     Furniture and fixtures                             75,000
     Leasehold improvements                            404,647
                                                    ----------
                                                       744,153

     Less accumulated depreciation and amortization     56,660
                                                    ----------
                                                    $  687,493
                                                    ==========

                                     -F-10-

<PAGE>

4.   INVENTORY

     Inventory as of December 31, 1999 consisted of the following:

     Salon finished goods                           $  843,938
     Tobacco raw materials                             495,534
     Tobacco finished goods                            529,100
                                                    ----------
                                                    $1,868,572
                                                    ==========

5.     NOTE PAYABLE AND LONG-TERM DEBT

      Unsecured note payable to an individual stockholder,
      with interest at 12%; paid in February 2000                  $  150,000
                                                                   ==========
      Unsecured note payable to minority stockholder,
      with interest at 7.5%; payable semi-annually beginning
      June 1, 2000 through maturity on November 23, 2002           $  465,000
                                                                   ==========

     The Company  financed its  receivables  in prior years  through a revolving
line-of-credit  facility with a commercial lender. In February 1999, the Company
entered into a settlement  agreement  with the lender for $200,000 to settle its
outstanding   obligation.   The  settlement  has  been  reflected  in  the  1998
consolidated statement of operations.


6.       MINORITY INTERESTS

     PCW was  incorporated in October 1997 with 7,750 shares of authorized $.001
par value common  stock.  At December  31, 1998,  PCW had 1,000 shares of common
stock  outstanding,  which were issued at par value. The Company owns 66% of the
common stock and an outside investor owns the minority  interest.  For financial
reporting  purposes,  the assets,  liabilities,  results of operations  and cash
flows for PCW are included in the Company's  consolidated  financial  statements
and the outside  investor's  interest is  reflected  in the  preferred  stock of
subsidiary.

     PCW had 2,250 shares of authorized  $.001 par value  preferred stock issued
and outstanding at December 31, 1998. PCW issued 1,750 shares of preferred stock
at inception to two unrelated  individuals  at $60 per share,  and 500 shares to
the Company for a 22% minority  interest in the preferred  stock. The holders of
PCW preferred stock are entitled to receive cumulative  dividends at the rate of
$14 per share before any  dividends  on the common  stock are paid.  Included in
preferred stock of subsidiary is $55,125 of preferred stock dividends payable at
December 31, 1999. The Company's  portion of the dividend has been eliminated in
consolidation.  In the event of dissolution of PCW, the holders of the preferred
shares are  entitled  to receive  $60 per share  together  with all  accumulated
dividends, before any amounts can be distributed to the common stockholders. The
shares are convertible only at the option of PCW at $120 per share.

     BB was formed in June 1999 and in  November  1999 was  authorized  to issue
50,000,000  shares of $.001 par value common stock, of which  49,100,000  shares
are Class A common  stock  and  900,000  shares  are  Class B common  stock.  At
December 31, 1999, BB had  9,000,000  shares of Class A common stock and 900,000
shares of Class B common stock outstanding.  The Company owns all of the Class A
common stock and the Class B common stock is owned by the minority interest (see
Note 7). For financial reporting purposes, the assets,  liabilities,  results of
operations  and cash  flows of BB are  included  in the  Company's  consolidated
financial statements,  and the outside investor's interest in BB is reflected in
the minority interest liability.

                                     -F-11-

<PAGE>

7. STOCKHOLDERS' EQUITY

     During 1999 all outstanding warrants to purchase shares in Synergy's common
stock were exercised.

     In 1994, Synergy adopted the 1994 Services and Consulting Compensation Plan
(the Plan).  Under the Plan, as amended,  8,400,000  shares of common stock have
been reserved for issuance.  Since the inception of the Plan, Synergy has issued
6,133,688 shares for payment of services to employees and  professional  service
providers such as legal,  marketing,  promotional  and  investment  consultants.
Synergy had  oversubscribed  the Plan by 439,288  shares at  December 31,  1999.
Common stock issued in connection  with the Plan was valued at the fair value of
the  common  stock at the date of  issuance  at an amount  equal to the  service
provider's  invoice amount.  Under the Plan, Synergy granted options to selected
employees and professional service providers.

     In November 1999,  Synergy entered into a stock purchase agreement with SBG
whereby SBG purchased  2,200,000 shares of Synergy's  restricted $.001 par value
common stock for $4,400,000.  The purchase price consists of $1,400,000  cash, a
credit  for a minimum  of  $2,000,000  of radio  advertising  and a credit for a
minimum of $1,000,000 of certain in-kind services, as defined.

     In November  1999,  BB entered into a stock  purchase  agreement  with SBG,
whereby SBG purchased  900,000 shares of $.001 par value Class B common stock in
BB for $765,000  cash.  The Class B common shares  constitute  50% of the voting
power of the common  stock  issued and  outstanding.  At December  31, 1999 Sybr
owned  9,000,000  shares of Class A common stock and SBG owned 900,000 shares of
Class B common stock.

     Simultaneously  with the purchase of the Class B shares, BB and SBG entered
into a Class A Common Stock Option Agreement  providing for a grant by BB to SBG
of the  right to  purchase  8,100,000  shares of its  Class A common  stock.  In
consideration  for the grant, SBG agreed to provide  $50,000,000 of radio and/or
television  advertising and  promotional  support,  as defined,  to be used from
November  1999  through  December  31,  2004.  The Company may not use more than
$10,000,000  of such  advertising in any one calendar year and may carryover any
unused  advertising  time from all previous  calendar years through December 31,
2005. SBG may terminate its obligation to carryover any unused  advertising time
after  December 31, 2001,  by providing 90 days prior  written  notice to BB. As
further  consideration for the grant, SBG also agrees to provide  $18,623,535 in
certain in-kind services, as defined, at the request of BB.

     In November 1999, BB acquired all of the outstanding $.001 par value common
stock  of PHS  from  NEF for an 8%  convertible  subordinated  note  payable  of
$750,000.  Simultaneously  with the transaction,  $600,000 of PHS's  convertible
subordinated debentures were converted to Synergy common stock.

     In November 1999, ALT, Tenda, GR and NEF entered into an agreement  whereby
NEF purchased the infrastructure  assets and the common stock of GR and the U.S.
distribution  network  established by NEF for ALT, as defined,  for  $4,268,237.
Simultaneously with the purchase,  the distribution agreement between ALT, Tenda
and NEF, described in Note 9, was terminated.

                                     -F-12

<PAGE>

     The following is a summary of such stock option  transactions for the years
ended  December  31,  1999 and  1998 in  accordance  with  the  Plan  and  other
restricted stock option agreements:

                                                                        Weighted
                                                                         average
                                                            Number of   exercise
                                                               shares      price
                                                            ---------   --------
Outstanding at December 31, 1997                                    -   $      -
Granted                                                     3,985,500   $    .60
                                                            ---------
Outstanding at December 31, 1998 (2,210,030 exercisable)    3,985,500   $    .60
Granted                                                     3,604,600   $   1.62
Exercised                                                  (2,996,500)  $   1.57
Expired                                                       (28,000)  $   1.50

Outstanding at December 31, 1999                            4,565,600   $   1.36
                                                            =========
Option price                                              $.40 - 3.50
                                                            =========
Available for grant:
December 31, 1998                                                   -
                                                            =========
December 31, 1999                                                   -
                                                            =========

     The  Company   applies  APB  25  in  accounting   for  its  stock  options.
Compensation  costs related to options and charged to  operations  were $256,130
and $6,250 in 1999 and 1998, respectively.  Had compensation costs for the stock
options  been  determined  based on the fair value at the grant date  consistent
with the method of SFAS 123,  the  Company's  net income and  earnings per share
would have been reduced to the pro forma amounts indicated below:

                                                  1999       1998
                                           ------------   --------
Net income (loss):
As reported                               $(6,341,682)   $297,508
                                           ============  =========
Pro forma                                 $(7,641,148)   $160,810
                                           ============  =========
Net income (loss) per common share:
As reported                               $      (.67)   $    .06
                                           ============  =========
 Pro forma                                $      (.81)   $    .03
                                           ============  =========

     The weighted-average fair value at date of grant for options granted during
1999 and 1998 was $.358 and $.034 per option, respectively. The weighted-average
contractual life of options outstanding at December 31, 1999 was approximately 4
years. The fair value of each option grant is estimated using the  Black-Shoales
option-pricing model with the following weighted-average assumptions used:

                                            1999                1998
                                     ------------       ------------
Dividend yield                                0%                  0%
Expected volatility                           0%                  0%
Risk-free rate of return              6.17-6.74%           4.43-5.5%
Expected life                       1 to 5 years        1 to 5 years

                                     -F-13-

<PAGE>

     The  Company  has also  reserved  100,000  shares for a stock  option  plan
(Option  Plan) for  non-employee,  independent  directors,  which  entitles each
non-employee,  independent  director an option to purchase  10,000 shares of the
Company's  stock  immediately  upon  election  or  re-election  to the  Board of
Directors.  Options  granted  under the Option  Plan will be at the fair  market
value  on the date of  grant,  immediately  exercisable,  and have a term of ten
years. The Company had no options  outstanding and exercisable and 80,000 shares
available for grant at December 31, 1999 at an option price of $.25 per share.


8.     INCOME TAXES

     At December 31, 1999, the Company had a net operating loss  carryforward of
approximately $15,930,000, which, if not utilized, will begin expiring in 2011.

     The  components  of the  deferred  tax  asset  at  December 31,  1999  were
approximately as follows:

         Net operating loss carryover          $5,416,300
         Deferred compensation                    105,300
         Allowance for doubtful accounts           23,800
         Inventory                                 31,800
         Capital losses                            12,800
         Valuation allowance                   (5,590,000)
                                               -----------
                                               $        -
                                               ==========

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

                                   1999      1998
                               --------   -------
         Federal - current     $      -   $ 6,085
         State and local              -     7,200
                               --------   -------
                Total          $      -   $13,285
                               ========   =======

     A  reconciliation  of income  tax  expense  computed  at the U. S.  Federal
statutory  rate of 34% and the Company's  effective tax rate for the years ended
December 31, 1999 and 1998 is as follows:

                                                           1999          1998
                                                         -------       -------
  Federal income tax expense at statutory rate                -         34.0%

  Increase (decrease) resulting from:
  Utilization of net operating loss carryforward              -       (34.0%)
  State and local income taxes, net of Federal benefit        -          3.2%
                                                         -------       -------
                                                              -          3.2%
                                                         =======       =======

9.   COMMITMENTS AND CONTINGENCIES

     LEASE COMMITMENTS

     The Company  leases  office and warehouse  space in Wexford,  Pennsylvania,
Syosset,  New York, and Miami,  Florida under operating  leases expiring in July
2002,  April 2001, and January 2001,  respectively.  The Company is also leasing
vehicles under operating leases expiring in 2004.  Future minimum lease payments
under non-cancelable operating leases as of December 31, 1999 were as follows:

                                     -F-14-

<PAGE>

          Year ending
         December 31,

              2000         $ 98,924
              2001           57,056
              2002           27,782
              2003           10,836
              2004              553
                           --------
                           $195,151
                           ========

     Lease  expense  for  the  years  ended  December  31,  1999  and  1998  was
approximately $88,900 and $54,800, respectively.

     SERVICE AGREEMENT

     BB's  inventory is  maintained in a public  warehouse in South Kearny,  New
Jersey.  The  Company is required  to make  rental  payments  based on 4% of the
Company's sales of inventory stored in the warehouse.  The agreement  expires in
October 2018 and may be  cancelled by either party with a 90 day written  notice
under certain circumstances, as defined.

     DISTRIBUTION AGREEMENTS

     In 1996,  the  Company  entered  into a ten-year  agreement  with a Chinese
trading company (ALT) to distribute  frozen seafood in the United States under a
licensing arrangement. The Company acted as an agent for ALT. Additionally,  the
Company sold promotional  grocery products to a subsidiary of ALT, for which ALT
provided funding. In November 1999, the agreement was terminated and the Company
acquired certain  infrastructure  and intangible  assets from ALT for $4,268,237
(see Note 7).

     In  December  1997,  NEF  entered  into  a  25-year   exclusive   worldwide
distribution  agreement with a Dominican Republic  corporation (DR) for the sale
and  distribution  of premium  handmade  cigars  manufactured  in the  Dominican
Republic. There is an option to extend the term of the distribution agreement up
to an additional 25 years.

     LITIGATION

     The Company is subject to legal  proceedings  and claims which arise in the
ordinary  course of its business.  In the opinion of  management,  the amount of
ultimate  liability with respect to these actions will not materially affect the
financial position, results of operations or cash flows of the Company.

     GUARANTEE

     In March 1998,  the Company guaranteed a $1,000,000 line-of-credit facility
to a Dominican  cigar  manufacturer,  which is owned by a PCW  stockholder.  The
purpose of the  line-of-credit is to provide financing to the cigar manufacturer
to which PCW will supply cigar wrappers.


10.   MAJOR CUSTOMERS

     The Company has one customer,  the U.S. agent of ALT,  which  accounted for
54% and 100% of total sales for 1999 and 1998, respectively.  The Company had no
accounts receivable from this customer at December 31, 1999.

                                     -F-15-

<PAGE>

11.  SEGMENT AND GEOGRAPHICAL INFORMATION

     The Company  offers a broad range of Internet  access  services and related
products to businesses  and consumers  throughout  the United States and Canada.
All of the Company's  identifiable  assets and results of operations are located
in the United States.  Management  evaluates the various segments of the Company
based on the types of products being  distributed which were, as of December 31,
1999, as shown below:


<TABLE>
<CAPTION>
<S>               <C>         <C>           <C>           <C>          <C>           <C>

                                        Grocery,
                            Salon       Health &     Internet
                         Products         Beauty        Based     Corporate         Total
============    ====   ==========    ===========  ===========   ===========   ===========
Revenue         1998   $  314,693    $10,740,856  $         -   $         -   $11,055,549
                1999    2,823,572      7,172,132    3,157,745        27,790    13,181,239
============    ====   ==========    ===========  ===========   ===========   ===========
Net earnings    1998   $    9,404    $  288,104   $         -   $         -   $   297,508
                1999      (55,878)      442,224    (4,776,732)   (1,951,296)  (6,341,682)
============    ====   ==========    ===========  ===========   ===========   ===========
Identifiable
assets          1998    $ 836,808    $ 5,917,304  $         -   $         -   $ 6,754,112
                1999    3,948,392         40,537    2,009,636     1,566,454     7,565,019
============    ====   ==========    ===========  ===========   ===========   ===========
Interest
expense         1998      $ 8,523    $    59,848   $        -   $         -   $    68,371
                1999       59,966        188,556        9,600             -       258,122
============    ====   ==========    ===========  ===========   ===========   ===========

</TABLE>


12.  FOURTH QUARTER ADJUSTMENTS

     The  Company  made  fourth  quarter   adjustments  to  record  advertising,
promotional and development expenses of approximately $2,178,000 and $256,000 in
compensation expense related to stock options.


13.   EARNINGS PER SHARE

     The following  data shows the amounts used in computing  earnings per share
and the  effect on the  weighted-average  number of  shares of  dilutive  common
stock:

<TABLE>
<CAPTION>
<S>                                                                  <C>         <C>

                                                                   1999         1998
                                                            ------------  ----------
Net income (loss) applicable to common stockholders         $(6,341,682)  $  297,508
                                                            ============  ==========
Weighted-average number of shares in basic EPS                9,434,993    5,101,041

Effect of dilutive securities (stock options and warrants)    1,010,842      523,549
                                                            ------------  ----------
Weighted-average number of common shares and
dilutive potential common shares used in diluted EPS         10,445,835    5,624,590
                                                            ============  ==========

</TABLE>

                                     -F-16-

<PAGE>


14.  SUBSEQUENT EVENTS

     In April 2000, the Company formed a wholly-owned subsidiary, DealByNet.com,
Inc.  to engage in  Internet-based  business  activities,  designed to create an
integrated supply chain from  manufacturers of a variety of products to business
customers.

                                     -F-17-

<PAGE>

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
<S>                <C>                                                              <C>

Exhibit No.      Description                                                        Page
-----------      -----------                                                        ----
3.1              Certificate of Incorporation and amendments thereto (1)             --

3.2              By-Laws (2)                                                         --

4                Warrants and debentures  defining  rights of security  holders      --
                 (3)

10.2             Distributorship  Agreement dated December 1997 between Fabrica      --
                 De Tobacco  Valle  Dorado SA and Gran  Reserve  Corporation  as
                 partially assigned to New Era Foods Inc. (4)

10.3             Synergy Brands Inc. 1994 Services and Consulting  Compensation      --
                 Plan, as amended (5)

10.4             Stock Purchase Agreement dated November 23, 1999 by and between     --
                 the Company and Sinclair Broadcast Group Inc. (6)

10.5             Stock  Purchase  Agreement  dated  November  23,  1999  between     --
                 BeautyBuys.com Inc., and Sinclair Broadcast Group Inc. (6)

21               Listing of Company Subsidiaries                                  EX-21

99               Listing of Company Intellectual Properties (6)                   EX-99

</TABLE>


(1)      The amendments to Certificate of Incorporation  filed 7/29/96 and filed
         6/24/98 and Certificate of Designation  regarding Preferred Stock filed
         6/24/98,  are  incorporated  by reference to the exhibits  filed to the
         Form 10K/A of the Company filed  9/3/98.  The original  Certificate  of
         Incorporation   and  other  amendments   thereto  are  incorporated  by
         reference to the exhibits  filed to the  registration  statement of the
         Company on Form S-1 (File No.  33-83226)  filed by the Company with the
         Commission on August 24, 1994.

(2)      The  amendment  to the  By-Laws  approved  by the  Company's  Board  of
         Directors  on  March 7,  1997  are  incorporated  by  reference  to the
         exhibits  filed to the Form  10K/A of the  Company  filed  9/3/98.  The
         original By-Laws are incorporated by reference to the exhibits filed to
         the  registration  statement  of the  Company  on Form  S-1  (File  No.
         33-83226) filed by the Company with the Commission on August 24, 1994

(3)      Copies of  outstanding  warrants and  debentures  are  incorporated  by
         reference to the exhibits  filed to the Form 8-K/A of the Company filed
         with the Commission (File No. 0-19409) on 2/3/98. Description of rights
         of Preferred Stock are included in Certificate of Designation regarding
         Preferred Stock, as amended,  and included as exhibit to the Form 10K/A
         of the Company filed 9/3/98.  Description of the Company's Common Stock
         is  incorporated  by  reference  to the  description  contained  in the
         Company's  Registration  Statement on Form 8-A (File No. 0-19409) filed
         with the  Commission  pursuant to Section  12(b) of the Exchange Act on
         July 16, 1991,  including any amendment or report filed for the purpose
         of updating such description.

(4)      Incorporated  by  reference  to the  exhibits  to the Form 10K/A of the
         Company filed 9/3/98.

(5)      Incorporated by reference to the Registration  Statement of the Company
         on Form S-8 (File No. 333-92243) filed with the Commission on 12/17/99.

(6)      incorporated  by  reference  to  exhibits  filed to the form 8-k of the
         company filed with the commission (file no. 0-19409) on 12/7/99.

                                      -35-