U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   FORM 10-KSB
                                   (Mark One)
              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

                   For the Fiscal Year Ended December 31, 2000

                                       OR

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

                        Commission File Number: 333-78443


                               TRAVELNSTORE, INC.
             (Exact name of registrant as specified in its charter)


            California                                  77-0507163
  (State or Other Jurisdiction of          (I.R.S. Employer Identification No.)
          Incorporation)

                        1100 Paseo Camarillo, Camarillo,
                     California 93010 (Address of principal
                         executive offices and zip code)

                  Registrant's telephone number: (805) 388-9004

 Securities registered pursuant to Section 12(b) of the Act:  None
 Securities registered pursuant to Section 12(g) of the Act:  Common Stock,
                                                              no par value

     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-KSB or any  amendment to
this Form 10-KSB.  [X]

     Approximate  aggregate market value of Common Stock held by  non-affiliates
of the Registrant, 936,146 shares, at March 23, 2001: $1.6 million. For purposes
of this calculation, executive officers, directors and holders of 10% or more of
the outstanding Common Stock are considered affiliates.

     The number of shares of the  Registrant's  Common Stock  outstanding  as of
March 30, 2001 was 9,886,146.

<PAGE>

                               TRAVELNSTORE, INC.
                                   FORM 10-KSB
                       FISCAL YEAR ENDED DECEMBER 31, 2000

                                      INDEX

PART I                                                                  Page No.
                                                                        --------
Item 1.       Business .................................................    1

Item 2.       Properties................................................    9

Item 3.       Legal Proceedings.........................................    9

Item 4.       Submission of Matters to a Vote of Security
                Holders.................................................    9


PART II

Item 5.       Market for Registrant's Common Equity and Related
                Shareholder Matters ....................................   10

Item 6.       Selected Financial Data...................................   11

Item 7.       Management's Discussion and Analysis of Financial
                Condition and Results of Operations ....................   12

Item 8.       Financial Statements and Supplementary Data...............   14

Item 9.       Changes in and Disagreements with Accountant on
                 Accounting and Financial Disclosure....................   15


PART III

Item 10.      Directors and Executive Officers of the Registrant .......   16

Item 11.      Executive Compensation....................................   18

Item 12.      Security Ownership of Certain Beneficial Owners
               and Management...........................................   24

Item 13.      Certain Relationships and Related Transactions............   24


PART IV

Item 14.      Financial Statements and Exhibits ........................   30


Signatures    ..........................................................   34


<PAGE>

                                     Part I

ITEM 1.       BUSINESS

         Certain statements in this Form 10-KSB are  forward-looking  statements
   that  are  made  pursuant  to the  Safe  Harbor  provisions  of  the  Private
   Securities  Litigation Reform Act of 1995. When used in this Form 10-KSB, the
   words  "believes",  `anticipates",  "expects",  and  similar  words often are
   intended to identify  certain  forward-looking  statements.  This Form 10-KSB
   includes   forward-looking   statements   based   largely  on  the  Company's
   expectations  which  are  subject  to a number  of risks  and  uncertainties,
   including,  but not  limited  to,  economic,  competitive  and other  factors
   affecting the Company's  operations,  markets,  products and services,  risks
   associated with growth, risks associated with media campaigns, the ability to
   obtain  financing,  the  successful  training and  retention of personnel and
   other factors discussed elsewhere in this Form 10-QSB and the documents filed
   by the Company with the  Securities  and Exchange  Commission.  Many of these
   factors  are  beyond the  Company's  control.  Actual  results  could  differ
   materially from these forward-looking statements. In light of these risks and
   uncertainties, there can be no assurance that the forward-looking information
   contained  in this Form 10-KSB  will,  in fact,  occur.  The Company does not
   undertake  any  obligation  to revise  these  forward-looking  statements  to
   reflect future events or circumstances.


COMPANY OVERVIEW

         The Company was founded in August 1998 as a limited liability  company.
   In April 1999 TravelnStore.Com,  Inc., a California corporation, acquired the
   limited  liability company and effective May 30, 2000 the Company changed its
   corporate name to TravelnStore, Inc.

         The Company  operates a retail  travel agency  consortium  known as the
   World Key Agency Group ("World Key").  Retail travel agency members  ("member
   agencies') of World Key receive  protected  territories  so as not to compete
   with other World Key agencies.  In addition,  each member agency will receive
   funds from the Company to help offset costs of collateral  materials  such as
   letterhead,  business cards and other  promotional  materials that will carry
   the World Key brand.

         The  Company  is  currently   recruiting   additional  member  agencies
   nation-wide to join the World Key consortium. The Company's strategic goal is
   2,500 member  agencies in the World Key  consortium.  At that level of member
   agencies in World Key the Company would realize optimum financial returns.

         The Company has personnel  located in various  locales  throughout  the
   country,  including employees based in California,  Florida, Illinois, Nevada
   and New York,  for  recruitment  of member  agencies  into World  Key.  These
   employees  have  extensive  travel  industry  experience  and some have prior
   retail  travel  consortium  experience.  The  Company  expects  to  add  more
   employees in the future in various  locations in the U.S. for  recruitment of
   member agencies into World Key.

                                       1
<PAGE>

         As of March 30, 2001 World Key has approximately 130 member agencies in
its consortium.  The Company began recruiting  member agencies into World Key in
mid-year 2000.

         The Company and the member  agencies  joining the World Key  consortium
enter into a binding legal agreement that,  amongst other  provisions,  provides
for:  use of World Key's  trademark  by the member  agency;  provides the member
agency  access  to  travel  service  providers'  inventory  and for  payment  of
commissions;  exclusive  affiliation in World Key,  advertising and marketing by
the Company of the World Key brand for the direct  benefit of each member agency
in World Key;  and  installation  at each  member  agency of World Key Net,  the
Company's proprietary travel distribution technology platform. The agreement may
be  terminated  by either the Company or the member  agency of World Key upon 30
days written notice.

         The  agreement  also  provides for equity  participation  by the member
agencies in the Company.  Subject to regulatory approvals,  as consideration for
the member agencies  joining and maintaining  their  membership in good standing
with World Key,  the Company  will  accrue a maximum of 2,000  shares per member
agency  of  the  Company's  common  stock  at a  rate  of 500  shares  per  full
consecutive  year that each member agency  maintains its membership in the World
Key  consortium.  The Company will issue these common stock shares at no cost to
the member  agencies.  The Company  anticipates  that these shares of its common
stock will not be  registered  shares  and,  thus,  subject  to various  holding
requirements  prior to becoming eligible for trading such securities on the Over
The Counter Bulletin Board,  the Company's  current listing venue for its common
stock.

         The agreement between World Key and the member agencies that join World
   Key is not a franchisor/franchisee  relationship.  World Key receives neither
   franchise fees nor royalties from any member agency in World Key. While World
   Key will provide management and marketing support to its member agencies,  it
   does not require member  agencies to follow any type of pre-set  policies and
   procedures  in  the  operation  of  their  individual  retail  travel  agency
   business.

         TravelnStore,  Inc. has entered into a number of contracts  with travel
   service  providers  for the benefit of its member  agencies in World Key such
   as: cruise lines,  including  Carnival Cruise Lines,  Royal Caribbean Cruises
   and Princess  Cruises;  car rental firms  including  Hertz,  tour  companies;
   destination  resorts and hotel groups.  The Company expects that as World Key
   grows in the number of member agencies, it will be able to provide the member
   agencies  with greater  commission  income than they  currently  receive from
   travel service  providers as an independent  retail travel agency or, in some
   cases, as a part of another travel agency consortium.

         The  Company's  primary  anticipated  revenue model is reliant upon the
   receipt of  overrides  and  commissions  through the World Key  members.  The
   Company  expects to receive  commissions  and overrides  from travel  service
   providers  for travel  that is booked by  customers  through  the  consortium
   members.

                                       2
<PAGE>

         The  Company  has  developed  and has  begun  deploying  to the  member
   agencies  of  World  Key  its  proprietary  travel  distribution   technology
   platform,  World Key Net. The World Key Net  technology  platform  represents
   leading-edge leisure travel distribution technology.  It provides a real-time
   interface  to member  agencies by being  resident  on computer  desktops as a
   browser-delivered  application. World Key Net contains within its proprietary
   database  all of the  special  offers and  blocked  group  space from  travel
   service  providers which are available only to and through member agencies of
   World Key.  It also  provides  interactive  training  for  individual  travel
   counselors of member agencies so that they can complete training  curriculums
   specific to participating travel service providers.

         World Key Net also  introduces an innovative  motivation  and incentive
   program  call "World Key Coins" to reward  individual  travel  counselors  at
   member agencies of World Key for reviewing communications from travel service
   providers, completing training programs and making bookings for travel.

   INDUSTRY OVERVIEW

         Retail Travel Agencies

         Historically,  individual  travel  agencies  have  been  classified  as
   commercial  travel agencies or leisure travel agencies.  Commercial  agencies
   tend to be larger and focus on commercial  accounts  whose primary  travel is
   for  business  purposes.  Leisure  agencies  primarily  deal with the general
   public for personal travel needs.

         Retail Travel Agency Industry Profile

         The latest U.S. Travel Agency survey reported that the number of retail
   agencies had declined between 1995 and 1997. However,  the survey also showed
   a 25% annual increase in travel  agencies'  gross sales from 1995-1997.  This
   dramatic increase in sales has occurred despite the competitive  threat posed
   by emerging  online travel  companies  and a host of other factors  including
   reductions in commissions paid by airlines and many initiatives undertaken by
   travel service  providers to do business  directly with the travel  consumer.
   Moreover,  the number of travel agencies  reported as profitable has steadily
   increased from 71% in 1995 to 73% in 1996 to 76% in 1997.

         The attrition rate for travel agencies is influenced primarily by sales
volume.  In 1997,  for example,  9 out of every 10 agencies  with gross sales in
excess of $5 million were profitable; a number which fell to eight out of 10 for
agencies  doing between $2 to $5 million and seven out of 10 for agencies in the
$1 to $2 million range. Only six out of 10 agencies selling less than $1 million
were profitable.

         Not  surprisingly,  the  greatest  attrition  has been with the smaller
travel agencies.  In 1995, for example, 30% of the travel agencies had less than
$1 million  in sales.  While  these  agencies  constituted  the  largest  single
category of agencies,  they only  accounted  for 6% of the total  retail  agency
sales. In contrast, in 1997, 19% of the travel agencies had less than $1,000,000
in sales and these  agencies  accounted  for only 3% of the total retail  agency
sales.

                                       3
<PAGE>

         These figures reflect a strong consolidation trend in the retail travel
agency  industry.  Smaller  agencies are  disappearing  to the benefit of larger
agencies.  Larger agencies are enjoying increased profitability as their volumes
increase.  We expect this  consolidation  to continue  and view it as a positive
trend.

         Transition to Leisure Travel

         The travel  agencies have  responded to these  challenges by increasing
their attention to the sale of the more lucrative  leisure and vacation  travel.
This has been  particularly  evident in the commercial agency sector as agencies
have expanded their leisure travel offerings and targeted their corporate client
bases. For example, air travel sales by agencies have dropped as a percentage of
gross sales from 61% in 1995 to 56% in 1997,  while income from  leisure  travel
sales increased from 49% in 1995 to 51% in 1997.

         In 1997,  for the first time since  1974,  income from  leisure  travel
sales by agencies exceeded 50% of gross revenues. Agencies typically receive 12%
to 20% commission on leisure sales. TravelnStore.com is specifically designed to
address the leisure  travel  market,  which  continues  to grow as the baby boom
generation matures and uses its discretionary income for travel purchases.

         Consortiums and Franchises

         A recent survey by Travel Weekly  magazine  showed that in 1997, 54% of
  all agency locations were affiliated with a leisure-oriented  consortium.  Ten
  years earlier, in 1987, only 36% of agency locations had such affiliations. In
  addition,  14% of agencies were  affiliated  with franchises such as Uniglobe,
  Carlson  Wagonlit  Travel  and  American  Express.  Consortiums  are  able  to
  negotiate with travel  service  providers to pay higher  commission  levels to
  their travel agency members.

         In addition to the higher  commission  levels for the member  agencies,
the consortium  typically  receives an override  commission based upon the total
sales of its member agencies.  These overrides typically range between 1% and 5%
of gross sales.

         Brick and Mortar Agency Sales Vs. Online Travel Sales

         Just as online retail sales compose only a small  percentage of overall
consumers  spending,  online  travel  sales  represent  only a small  portion of
overall travel industry gross receipts. For example, travel agents accounted for
$126 billion in sales in 1997 whereas  online travel sales amounted to only $654
million (approximately 0.5% of total receipts). Just the annual growth in agency
sales of 5% or $6.3 billion between 1997 and 1998, is more than three times 1998
total online  travel sales gross  revenue.  Many  analysts have pointed out that
rumors  about  the  demise  of  travel  agencies  in the  face of  online  sales
competition are greatly exaggerated.


                                       4
<PAGE>

         Travel Service Providers

         Travel service providers include cruise lines,  package tour companies,
car rental companies, hotel groups, destination resorts and airlines. The retail
travel  agency  industry  has  traditionally  supplied  the  major  distribution
infrastructure  for  travel  service  providers.  Consequently,  travel  service
providers have invested heavily in cultivating,  educating and motivating travel
agents to sell their products.

         Agency Competitors

         In most cases,  travel service providers also distribute their products
directly to consumers. Traditionally this has been accomplished through consumer
direct advertising and the use of in-house  reservation  centers or employees to
field in-coming 800# telephone calls. This direct  competition has always been a
point of  contention  between  travel  agencies  and travel  service  providers.
Consequently,  travel  service  providers  have been  judicious  in their use of
direct  consumer  marketing,  oftentimes  referring  inquiries  first to  travel
agencies and then to their own reservations staff.

         Internet Marketing Initiatives

         Virtually  all  types of travel  service  providers  are  using  online
commerce to offer their services.  The travel industry has embraced the Internet
because it is a perfect medium for the inexpensive distribution of large amounts
of information.  Because the presentation of travel services has always employed
photographs and maps, the graphical  nature of the Internet is a perfect fit for
the distribution of travel information.

         However,  the Internet is not a conversive medium. What is presented is
what is presented.  To make an inquiry requires the use of e-mail, which usually
has a long response  cycle or the consumer must make a direct  telephone call to
the travel service provider.  Consequently, only very simple travel services can
easily be sold online.  For this reason,  the more complex and expensive leisure
travel   services   continue  to  be  sold  by  retail  travel   agencies  on  a
person-to-person basis.

         Internet Competition Sensitivity

         Internet market  initiatives by travel service providers have also been
burdened by their desire to not appear overly  competitive  with their  existing
retail travel agency distribution networks. This is particularly true of leisure
travel service providers.

         Online Travel Industry Major Players

         Three  companies  dominate  the  online  commerce  sector of the travel
industry:  Preview  Travel,  Travelocity.com  and  Expedia.com.  Each  of  these
recorded  sales of  approximately  $250 million in 1998.  Each of them also lost
tens of millions of dollars.  Together  they share 40% of a market  projected to
grow to $7  billion  in the  year  2000.  These  three  companies  have  rapidly


                                       5
<PAGE>

solidified  their  position  of  dominance  by  obtaining   so-called   "portal"
agreements to be the travel service providers for many of the major access sites
to the Internet. For example, Preview Travel has portal agreements with AOL.com,
Excite.com, Lycos.com and Webcrawler.com.  Expedia is paired with Microsoft.com,
Infoseek.com, MSN.com and Travelocity.com links with Yahoo.com and Netscape.com.
All  told,  Web  site  portals  garner  over 150  million  visits  per  month by
prospective  consumers,  any of  whom,  depending  upon  which  site  they  have
accessed, can click directly into Preview,  Expedia or Travelocity.com to make a
travel purchase or obtain travel related information.

         Online Travel Industry Losses

         The reasons online travel agencies have incurred  substantial losses is
that they have substantial expenses.  Multi-million dollar costs associated with
acquiring  and  maintaining   portal   agreements  and  other   advertising  and
promotional expenses to generate traffic volume to their sites have insured that
these large online agencies will not turn a profit in the foreseeable future. In
addition,  they have  incurred  the  expenses  of setting up the online  agency,
acquiring and training travel agents and other significant operating expenses.

MARKETING AND ADVERTISING

         The Company's marketing and advertising strategy is two-fold, one is to
recruit  additional  member agencies into the World Key consortium and second is
to increase sales of current member agencies of World Key.

         The Company  advertises  in industry  trade  journals and  magazines to
build brand awareness of its World Key brand.  Travel service providers that the
Company has agreements with participate in the cost of such advertising in trade
publications  in  exchange  for  exclusive  inclusion  of their  products in the
Company's advertisement.

The Company is also obligated in its agreement  with current member  agencies of
the World Key  consortium  to  promote  the  World  Key  brand  entirely  at the
Company's  expense.  Additionally the Company makes various marketing  materials
available to the member  agencies at its expense.  The Company is also obligated
to negotiate and provide  direct mail marketing  programs to member  agencies of
World Key for a minimum of eight mailings per year to the member agency's client
list. The Company will provide all collateral  material and mailing  services to
member agencies at its expense.

COMPETITION

         The Company  does not  directly  sell travel.  However,  the  Company's
revenue is derived from override  commissions  from travel sales booked  through
member agencies of World Key.  Consequently,  the Company competes,  directly or
indirectly,  with every other  travel  services  distributor,  including  online
travel providers, the brick and mortar physical locations of travel agencies and
direct sales by travel service  providers to the public.  In the broadest sense,
TravelnStore, Inc. competes with all other travel sales distribution channels.

                                       6
<PAGE>

GOVERNMENT REGULATION

         The Company's  business is subject to and affected by various  federal,
state and local laws. The Company has not experienced  significant  difficulties
complying with federal, state and local laws in order to conduct its business.

INTELLECTUAL PROPERTY RIGHTS

         The  Company   has  filed  for   registration   of  the  service   mark
"TravelnStore.com" with the United States Trademark Office.  TravelnStore,  Inc.
is the registered owner of the "TravelnStore.com" Internet domain name.

         The  Company  has  not  filed  for  patent  protection  of  any  of its
technology  or business  systems  with the United  States  Patent  Office or any
foreign patent office.

         TravelnStore,  Inc. utilizes the World Key trademark held by World Key,
Inc., an affiliated company of TravelnStore, Inc., as part of agency recruitment
efforts and as the brand name for the World Key Agency Group consortium. Under a
Trademark  License  Agreement with World Key, Inc. dated September 24, 1999, the
Company  acquired  the  exclusive  right to use the "WORLD  KEY"  trademark  and
service mark in the United States.  The principal terms of the Trademark License
Agreement are as follows.

     o    The term of the license is  perpetual,  subject to the right of either
          party to terminate the license for cause.

     o    The licensed territory is the United States.

          o    The Company has the right to sublicense  the Trademark for use by
               retail  travel  agencies  participating  in its World Key  Agency
               Group network of agencies.

     o    Royalties that the Company has to pay are as follows:

     o    No  royalties  are due until the first  sublicense  is  granted by the
          Company, which occurred in July, 2000;

     o    Upon grant of the first sublicense, the Company will pay a license fee
          of $25,000, which has been paid; and

          o    Thereafter,  the  Company  will have to pay an annual  royalty of
               $250 per retail travel agency who is  participating  in the World
               Key Agency  Group and to whom the  Company  has  sublicensed  the
               Trademark.   As  of  December  31,  2000  the  Company  has  paid
               approximately $31,000 in royalties under this agreement.

     o    TravelnStore,  Inc. has the option to acquire the Trademark from World
          Key, Inc. on the following terms:

     o    The Company must  exercise the option  within 36 months after the date
          of the Trademark License Agreement, that is by September 30, 2002;

                                       7
<PAGE>

     o    The Company must pay World Key, Inc. a purchase price equal to the sum
          of:

     o    The  product  obtained  by  multiplying   $2,500,  by  the  number  of
          sublicenses that are outstanding as of the date of the exercise of the
          option; and

          o    The product  obtained  by  multiplying  $2,500,  by the number of
               sublicenses  that are granted  after the date of the  exercise of
               the option and prior to September 30, 2004; or

          o    TravelnStore,  Inc. can pay the purchase price either in cash, or
               as long as the trading price of the Company's  common stock is at
               least $5.00 per share,  in shares of common stock,  which have an
               aggregate value equal to the purchase price.

         The Company  believes that the "WORLD KEY"  trademark  has  significant
value and will  facilitate  the  Company's  establishment  of the retail  travel
agency  network.  At the same time,  the Company has  attempted to structure the
Trademark  License  Agreement so that its  obligations  are  manageable  and are
proportionate  to its use of the Trademark and the benefit the Company  realizes
from the agency network.

         Jim B. Tyner,  Chairman of the Board of Directors  and Chief  Executive
Officer of the Company, Yula Greco, Vice President,  Secretary, Controller and a
director of the Company and John R. Toal, President, Chief Operating Officer and
a director of the Company are also principal  shareholders of World Key, Inc. Of
a total of 6.0 million shares outstanding of World Key, Inc., Jim B. Tyner, Yula
Greco and John R. Toal are the  beneficial  owners of 1.8  million  shares,  1.4
million shares and 120,000 shares, respectively. Jim B. Tyner and Yula Greco are
also officers of World Key, Inc.

EMPLOYEES

         As of March 30, 2001, TravelnStore, Inc. had 21 employees consisting of
four  executive  officers,  six  administrative  support  personnel and 10 field
personnel  located in various  locations in the U.S. involved in the recruitment
and administration of member agencies of World Key. The company anticipates that
additional  employees  will  need to be hired in the  future in its  efforts  to
recruit  and  administer   member   agencies  into  the  World  Key  consortium,
particularly  field  level  personnel.  No  Company  employees  are  covered  by
collective  bargaining  agreements  and the  Company  has never  experienced  an
organized  work  stoppage,  strike or labor  dispute.  The Company  believes its
relations with its employees are generally satisfactory.

                                       8
<PAGE>

ITEM 2.       PROPERTIES

         The Company's  principal  offices are located at 1100 Paseo  Camarillo,
Camarillo,  California  93010.  The office  facility,  a freestanding  one-story
building,  consists of 5,100 square feet of office space. The Company has leased
these  offices  under a  five-year  standard  industrial/commercial  lease.  The
initial term of the lease expires  November 30, 2004.  The Company has the right
to extend the term of the lease for two additional 5-year periods. The base rent
payable  under the lease is  approximately  $5,300 per month,  or  approximately
$64,000 per year. TravelnStore,  Inc. has the right of first refusal to purchase
the building in which the offices are located if the  Landlord  proposes to sell
the building.


ITEM 3.       LEGAL PROCEEDINGS

         The  Company is a party to  certain  legal  proceedings  arising in the
ordinary  course of  business.  While it is not possible to predict or determine
the outcome of any of these proceedings, in the opinion of the Company, based on
review  by legal  counsel,  any  resulting  liability  will not have a  material
adverse effect on the Company's  financial  position or results of operations of
its business.


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

         Not applicable.
















                                       9
<PAGE>

                                     PART II

ITEM 5.       MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER
              MATTERS

         MARKET INFORMATION

         The  Company's  common  stock  has  been quoted on the Over The Counter
Bulletin Board since February 1, 2001 under the symbol "TVLN".

         The  high  and low  closing  bid  quotations  for the  common  stock as
reported  by the  National  Quotation  Bureau for the period of February 1, 2001
through March 30, 2001 was:

                                    High             Low
                                    ----             ---
                                    $7.88            $1.75

         On March 30, 2001 the last reported quoted price of the common stock on
the Over The Counter Bulletin Board was $1.75.

         As of March 30, 2001 there were approximately 53 shareholders of record
of the Company's  common stock.  The Company  believes a certain  portion of the
Company's  outstanding  common stock may be held in broker "street name" for the
benefit of individual investors.

         DIVIDEND POLICY

         The  Company  has  not   declared  or  paid  any  cash   dividends   or
distributions on its capital stock in the past fiscal year. The Company does not
intend to pay any cash dividends on its common stock in the foreseeable  future,
as the  current  policy of the  Company's  Board of  Directors  is to retain all
earnings to support operations.  Future declaration and payment of dividends, if
any,  will be  determined  in light of then current  conditions,  including  the
Company's earnings, operations,  capital requirements,  financial conditions and
other factors deemed relevant by the Board of Directors.


ITEM 6.       SELECTED FINANCIAL DATA

         The following  table sets forth for the periods and the dates indicated
selected  financial  data  of the  Company.  The  following  should  be  read in
conjunction  with the Financial  Statements and Notes thereto and  "Management's
Discussion  and  Analysis of  Financial  Condition  and  Results of  Operations"
appearing elsewhere in this Form 10-KSB.


                                       11
<PAGE>

                                     For the Year Ended     For the Year Ended
                                     December 31, 2000      December 31, 1999
                                     ------------------     ------------------
   Statement of Operations Data:

   Revenues                          $          43,044      $          59,385
   Operating Expenses                $       4,751,831      $         997,934
   Interest Expense                  $       1,474,995      $       2,503,183
   Net Loss                          $      (6,183,782)     $      (3,441,732)
   Basic and Diluted Loss per
     Common Share*                   $           (0.66)     $           (0.37)


                                      December 31, 2000      December 31, 1999
                                      -----------------      -----------------
   Balance Sheet Data:

   Total Assets                       $          481,126     $         451,661
   Current Liabilities                $        4,961,624     $       1,557,834
   Working Capital Deficit            $       (4,594,765)    $      (1,172,116)
   Notes Payable, Long-Term           $           31,899     $          40,942
   Shareholders' Deficit              $       (4,512,397)    $      (1,147,115)

* Based on  9,400,000  shares of  common  stock  issued  and  outstanding  as of
December 31, 2000 and 1999.  The per share number  reflect a 2-for-1 stock split
that was effective as of August 25, 1999.


ITEM 7.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
              RESULTS OF OPERATIONS

         Results of Operations

         The Company is still in the early stages of its strategic business plan
and is  expected to incur  substantial  future  losses.  The Company has not, to
date, generated any significant revenues from its operations. The ability of the
Company to generate  significant revenues and positive cash flows will depend on
several  factors,  including the  recruitment of a substantial  number of member
agencies  into World Key and entering  into  favorable  override and  commission
contracts with significant travel service providers.

         No   assurances  can  be   given,  however,  that   the   Company   can
successfully  execute its strategic business plans,  including  recruitment of a
significant  number of  retail  travel  agencies  into  World Key and  executing
favorable  commission  and override  contracts with  significant  travel service
providers.

         From its inception in August 1998 through December 31, 2000 the Company
has incurred  substantial  operating losses. As of December 31, 2000 the Company
has  accumulated a deficit of  $9,948,484.  For the year ended December 31, 2000
the Company incurred a net loss of $6,183,782.

                                       12
<PAGE>

         Liquidity and Capital Resources

         Since its inception,  TravelnStore, Inc. has funded its  operations and
capital  expenditures  primarily  through  private  placement of debt and equity
securities.  The Company will require additional capital to continue operations.
However,  there can be no  assurance  that  capital  will be  available on terms
acceptable to the Company,  if at all. The ability to obtain additional  capital
is dependent upon many factors,  including the condition of the general  economy
and specific  considerations about the Company and its prospects at the point in
time when funding is sought.

         Recent Developments

         On June 30, 2000 the Company was declared  effective by the  Securities
and Exchange  Commission to proceed with a Direct Public  Offering  ("DPO").  On
October  11,  2000 the  Company  filed a  post-effective  amendment  to its SB-2
Registration  Statement  to offer for sale a minimum  of  461,539  shares  and a
maximum of  1,500,000  shares of its common stock at a price per share of $6.50.
The anticipated  offering proceeds to the Company from the DPO, before deducting
expenses  of the  offering,  was a minimum of $3 million  and a maximum of $9.75
million. As of March 30, 2001, the Company had not completed its DPO and had not
sold  any of the  securities  covered  by the  DPO.  Further,  the  Company  has
abandoned all efforts to complete its DPO.

         In October  2000 the Company  delivered to its market maker for further
delivery to a certain investor upon the investor's  payment of the consideration
required in the DPO,  462,000 shares of the Company's common stock in accordance
with the SB-2  Registration  Statement.  After  issuance  of such  shares to the
market maker, the investor reneged on the payment of the purchase of the shares.
As of March 30, 2001 the shares have  neither  been  returned to the Company nor
cancelled. However, no subsequent sale has been completed and the Company is now
in the process of requesting that the shares be returned.

         The Company has not included the foregoing 462,000 shares in its number
of issued and outstanding  shares of common stock in the accompanying  financial
statements  and the  portions  of this  Report  which  deal  with the  Company's
outstanding securities, since the sale of such shares was not consummated.

         Impact of Recent Accounting Pronouncements

         In  December  1999,  the  Securities  and  Exchange   Commission   (the
Commission)  issued Staff Accounting  Bulletin No. 101,  Revenue  Recognition in
Financial  Statements,  which is to be applied  beginning with the fourth fiscal
quarter of fiscal years beginning  after December 15, 1999, to provide  guidance
related  to  recognizing   revenue  in   circumstances   in  which  no  specific
authoritative  literature exists. The adoption by the Company in the application
of the Staff Accounting Bulletin to the Company's  financial  statements did not
have a  material  change  in the  amount  of  revenues  the  Company  ultimately
realized.


                                       13
<PAGE>

         In March 2000, the Financial  Accounting  Standards Board (FASB) issued
FASB  Interpretation  No.  44  (Interpretation   44),  "Accounting  for  Certain
Transactions Involving Stock Compensation".  Interpretation 44 provides criteria
for the recognition of compensation expense in certain stock-based  compensation
arrangements  that are  accounted for under APB Opinion No. 25,  Accounting  for
Stock-Based  Compensation.  Interpretation  44 is effective  July 1, 2000,  with
certain  provisions  that are effective  retroactively  to December 15, 1998 and
January 12,  2000.  Interpretation  44 did not have any  material  impact on the
Company's financial statements.

         In June 1998, the Financial  Accounting Standards Board issued SFAS No.
133,  "Accounting for Derivative  Instruments and Hedging  Activities." SFAS No.
133, as amended by SFAS No. 137, is effective for fiscal years  beginning  after
June 15, 2000. SFAS No. 133 requires the Company to recognize all derivatives as
either assets or liabilities  and measure those  instruments  at fair value.  It
further  provides  criteria for derivative  instruments to be designated as fair
value,  cash  flow  and  foreign  currency  hedges  and  establishes  respective
accounting  standards for reporting  changes in the fair value of the derivative
instruments.  Upon  adoption,  the Company  will be  required to adjust  hedging
instruments  to fair value in the balance  sheet and  recognize  the  offsetting
gains  or  losses  as  adjustments  to  be  reported  in  net  income  or  other
comprehensive  income,  as  appropriate.  The Company is evaluating its expected
adoption date and currently  expects to comply with the requirements of SFAS 133
in fiscal year 2001.  The Company does not expect the adoption  will be material
to the Company's  financial  position or results of operations since the Company
does not believe it participates in such activities.

         In January 2001,  the Financial  Accounting  Standards  Board  Emerging
Issues Task Force issued EITF 00-27 effective for convertible  debt  instruments
issued  after  November  16, 2000.  This  pronouncement  requires the use of the
intrinsic  value method for  recognition of the  detachable and imbedded  equity
features  included with  indebtedness,  and requires  amortization of the amount
associated with the convertibility  feature over the life of the debt instrument
rather  than the  period for which the  instrument  first  becomes  convertible.
Inasmuch as all debt  instruments  that were  entered into prior to November 16,
2000 and all of the debt discount relating to the beneficial  conversion feature
was previously  recognized as expense in accordance with EITF 98-5,  there is no
impact on these  financial  statements.  This EITF 00-27,  could  impact  future
financial statements, should the Company enter into such agreements.


ITEM 8.       FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         See "Index to Financial Statements" on Page F-1.




                                       14
<PAGE>


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

         For the fiscal year ended  December 31, 1999, for the period August 18,
1998 (date of inception) to December 31, 1998 and the interim period  subsequent
to  December  31,  1999,  the firm of  Farber  and Hass  ("F&H")  served  as the
Company's  auditors.  Effective  January 4, 2001,  F&H resigned as the Company's
auditors.   Effective  February  15,  2001,  the  Company  retained   Stonefield
Josephson,  Inc.  ("Stonefield") to act as the Company's  independent  certified
public  accountant to audit the Company's  financial  statements  for the fiscal
year ended December 31, 2000.

         During the period of  engagement  of F&H,  there were no  disagreements
between the Company and F&H on any matter of accounting principles or practices,
financial  statement   disclosure,   or  auditing  scope  or  procedure,   which
disagreements (if not resolved to the satisfaction of F&H) would have caused F&H
to make  reference  in  connection  with their  report to the subject  matter of
disagreements. The accountants' report on the Company's financial statements for
the fiscal year ended December 31, 1999 and for the period August 18, 1998 (date
of  inception)  to December  31,  1998 did not  contain  any adverse  opinion or
disclaimer  of opinion and was not  qualified or modified as to  uncertainty  or
audit  scope  or  accounting  principles,  except  to  express  doubt  as to the
Company's ability to continue as a going concern.








                                       15
<PAGE>

                                    PART III

ITEM 10.      DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The names of the directors  and  executive  officers of the Company and
certain information with respect to each of them is set forth below.

NAME                    AGE                        POSITION
----                    ---                        --------
Jim B. Tyner             52         Chairman, Chief Executive Officer and
                                     Director
John R. Toal             61         President, Chief Operating Officer and
                                     Director
Yula Greco               54         Vice President, Secretary, Controller and
                                     Director
Glenn E. Glasshagel      55         Senior Vice President, Chief Financial
                                     Officer
Richard A. Bush          43         Independent Director
James M. Kingzett        56         Independent Director
William E. Schenck       61         Independent Director

         JIM B. TYNER is a  co-founder  of  TravelnStore,  Inc.  and has  served
as Chairman and Chief Executive Officer since its inception.  From 1969 to 1976,
he was involved in the brokerage and sale of homes and  agricultural  investment
properties.  In 1976,  he  founded a  California  licensed,  independent  escrow
company,  which he built into a multi-location  firm. He sold the escrow company
in 1989,  having  completed  over  20,000 real estate  transactions.  Mr.  Tyner
purchased  two  general  travel  agencies in 1981,  which he grew from  $600,000
annual  sales to $3.5 million in four years.  Mr.  Tyner sold these  agencies in
1985.  From 1990 to 1995, Mr. Tyner was involved in real estate  development and
brokerage,  and served as the Managing Partner of 250,000 square feet of office,
industrial and commercial  buildings.  Mr. Tyner founded World Key, Inc. in 1994
as a  specialized  travel  agency for travel to Great  Britain.  He continues as
Chairman and President of World Key, Inc. Mr. Tyner has been active in community
affairs,  serving on the Board of Regents of California Lutheran University,  as
President  of the  Camarillo  Chamber of  Commerce,  as President of the Ventura
County Escrow  Association  and the  Independent  Escrow  Association and on the
Executive Board of the California Escrow Association. Mr. Tyner is a graduate of
California Lutheran University.

         JOHN R. TOAL is a co-founder of  TravelnStore,  Inc. and  has serve  as
President and Chief Operating Officer of TravelnStore, Inc. since its inception.
Prior to joining the Company,  Mr. Toal was a Director and President of Impactor
Environmental Products,  Inc., a publicly held company and the parent company of
Environmental  Glass, Inc. Prior to his involvement with Impactor  Environmental
Products,  Inc.  he  served  as  President  of  Toal  and  Associates,  a  media
advertising  and  design  consulting  firm,  which he  founded  in 1960.  He has
lectured at UCLA and other venues on the topics of Advertising and Marketing. He
is a graduate of the American Academy of Art in Chicago.


                                       16
<PAGE>

         YULA GRECO  is a co-founder  of  TravelnStore,  Inc.  and has served as
Vice  President,  Controller and Secretary  since its  inception.  She is also a
co-founder of World Key, Inc. and has served as its Vice President and Secretary
since the inception of that Company in 1994.  From 1981 to 1989 Ms. Greco served
as  Controller of Coronado  Escrow Inc. and World Key Travel,  Inc. From 1989 to
1996 she served as Controller for several real estate partnerships controlled by
Jim B. Tyner.  Ms. Greco holds a degree in  accounting  from  Ventura  Community
College.

         GLENN E.  GLASSHAGEL  joined the  Company  in July 2000 as Senior  Vice
President and Chief Financial Officer. Prior to joining TravelnStore,  Inc., Mr.
Glasshagel  served as Executive  Vice President and Chief  Financial  Officer of
Roadhouse Grill,  Inc.  (Nasdaq:GRLL),  Pompano Beach,  Florida,  a $150 million
multi-unit  restaurant chain. He served in that capacity from October 1998 until
joining the Company.  From September 1996 to October 1998 he served as Executive
Vice President and Chief Financial  Officer for Casino  Software  Corporation in
Las Vegas,  Nevada,  a Vancouver,  British  Columbia,  Stock  Exchange  Start-up
Company that developed software for the gaming industry.  From August 1992 until
September  1996,  Mr.  Glasshagel  served as Vice  President,  Finance and Chief
Financial  Officer of  HomeTown  Buffet,  Inc.,  San Diego,  California.  He was
instrumental in leading  HomeTown  Buffet,  Inc.  (formerly  Nasdaq:HTBB) in its
initial public  offering as well as follow-on  public stock and debt  offerings,
raising nearly $100 million in capital to rapidly grow the Company.  At the time
HomeTown Buffet, Inc. merged with Buffets, Inc. (formerly  Nasdaq:BOCB) in 1996,
HomeTown Buffet, Inc. operated approximately 100 restaurants throughout the U.S.
with annual revenues totaling more than $250 million. Mr. Glasshagel, a graduate
of Southern  Illinois  University  with a degree in  accounting,  is a Certified
Public Accountant.

         RICHARD A. BUSH graduated with honors from Indiana University  in 1980.
He qualified as a Certified  Public  Accountant  in 1980. He spent 10 years with
Arthur  Andersen  & Co.  and held  the  position  of  Manager,  Audit  Financial
Consulting  Practice  in its  Chicago  office.  Mr.  Bush  joined the  Aerospace
Division of Abex,  Inc. as  Controller  in 1990.  He also served as a Co-General
Partner, with Mr. Tyner, in several,  large commercial real estate syndications.
He currently  serves as Vice President and Chief Financial  Officer of Fairfield
Manufacturing  Company Inc., a manufacturing  company with revenues in excess of
$200 million annually located in Lafayette, Indiana.

         JAMES M. KINGZETT is a graduate of Carroll  College and the  University
of  Montana  School  of Law.  He has over 25  years  experience  in real  estate
acquisition, development, management and disposition with specialized experience
in the coordination of design,  planning and permitting functions of real estate
development. He has founded and directed successful businesses, both on the U.S.
mainland  and in the  Pacific  Basin.  From  1992 to  present,  he is  served as
President  of  Pro-United  Inc.,  a Texas  Corporation,  involved in real estate
investment,  development and brokerage in Texas and South Eastern United States.
From 1981 to present,  he has also served as an officer and  director of Pacific
Endeavors,  Ltd.,  which is  engaged in the  export  and  brokerage  of food and
building  materials   throughout  the  South  Pacific.   He  is  a  resident  of
Gardnerville, Nevada.


                                       17
<PAGE>

         WILLIAM  E.  SCHENCK  is the  founder  and Chief  Executive  Officer of
International   Creative  Alliance,   Inc.,  an  employment   placement  company
specializing  in the placement of various cinema  specialists in film shoots and
post production areas of the film industry. He founded the company in 1998. From
1992 until 1999 Mr.  Schenck was the founder and Chief  Executive  Officer of O2
Investments,  Inc., a durable  medical  equipment  company  specializing  in the
treatment  of  respiratory  diseases.  In  1994  Mr.  Schenck  also  founded  O3
Investments,  Inc., a Virginia  corporation  that filed Chapter 11 under the U.S
Bankruptcy  Code in 1999.  Subsequent to the filing all  creditors  were paid in
full,  the  bankruptcy  was  discharged and the company was sold. Mr. Schenck is
also a director of  Integrated  Healthcare  Partners,  Inc.,  a  privately  held
software  company.  He is a  graduate  of  Occidental  College  in Los  Angeles,
California.

         SECTION 16 (A)  BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Section 16 (a) of the Securities  Exchange Act of 1934, as amended (the
"Exchange  Act"),  requires the Company's  directors and executive  officers and
persons  who own more than 10% of the  Company's  common  stock to file with the
Securities and Exchange  Commission  initial reports of ownership and reports of
changes in ownership in TravelnStore,  Inc.'s common stock. Officers,  directors
and  beneficial  owners  of more  than 10% of the  Company's  common  stock  are
required by the  Securities and Exchange  Commission  regulations to furnish the
Company with copies of all Section 16 (a) forms that they file.

         Based solely on a review of the copies of such reports furnished to the
Company,  or written  representation  that no such  reports were  required,  the
Company  believes that for the fiscal year ended  December 31, 2000,  all of the
Company's officers,  directors and greater than 10% beneficial owners,  complied
with all Section 16 (a) filing requirements applicable to them.


ITEM 11.      EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

         The following table sets forth the total cash  compensation  paid or to
be paid, as well as certain  other  compensation  paid or accrued,  for services
rendered during the fiscal years ended December 31, 2000 and 1999 and the period
from August 18, 1998 (date of inception of the Company)  until December 31, 1998
by the Chief  Executive  Officer and all executive  officers  whose total annual
salary and bonus  exceed  $100,000  for the fiscal year ended  December 31, 2000
(the "Named Executive Officers"):

                                       18
<PAGE>

<TABLE>
<CAPTION>
                           SUMMARY COMPENSATION TABLE

                                                                           Long-Term
                                   Annual Compensation                Compensation Awards
                             ---------------------------------------  ---------------------
Name and Principal                                    Other Annual    Securities Underlying
Position              Year   Salary (1)   Bonus (2)  Compensation(3)    Options/SAR's (4)
------------------    ----   ----------   ---------  ---------------  ---------------------
<S>                   <C>    <C>          <C>        <C>              <C>
Jim B. Tyner          2000   $ 84,000     $ -0-         $ -0-                  -0-
Chief Executive       1999     84,000       -0-           -0-                  -0-
Officer, Chairman     1998       -0-        -0-           -0-                  -0-
and Director
</TABLE>


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

(1)  The dollar value of base salary (cash and  non-cash)  received.  Amounts in
     the table represent  salary which was accrued for Mr. Tyner,  but which had
     not been paid to Mr. Tyner as of March 30, 2001.

(2)  The dollar value of bonus (cash and non-cash) received.

(3)  Any other annual compensation not properly  categorized as salary or bonus,
     including perquisites and other personal benefits, securities or property.

(4)  The value of common  stock to be  received  upon the  exercise of all stock
     options and stock appreciation rights granted during the fiscal years shown
     in the table.


         Stock Incentive Plans

         No options, stock appreciation  rights  or other stock incentives  were
granted under the Company's  1999 Stock  Incentive  Plan to any of the Executive
Officers listed in the Summary Compensation Table in fiscal year 2000.

         Employee Pension, Profit Sharing or Other Retirement Plans

         Except as provided in  the Company's  employment  agreements  with  its
Executive Officers,  the Company does not have a defined benefit,  pension plan,
profit sharing or other retirement  plan,  although the Company may adopt one or
more of such plans in the future.


                                       19
<PAGE>

         Compensation of Directors

         At  present  the  Company  does  not  pay  its  directors for attending
meetings of the Board of  Directors,  although  the  Company  expects to adopt a
director  compensation  policy  in the  future.  The  Company  has  no  standard
arrangement  pursuant to which  directors of the Company are compensated for any
services  provided  as a  director  or for  committee  participation  or special
assignments.

         Employment Agreements

         The Company has entered into written Employment Agreements with each of
the Executive  Officers listed in Item 10, "Directors and Executive  Officers of
the Registrant."

         The Company entered into Employment  Agreements with Jim B. Tyner, John
R. Toal and Yula Greco on July 1, 1999.  Each of the  Employment  Agreements has
the following principal terms and conditions:

          o    The term of the  Employment  Agreement is one year beginning July
               1, 1999 and ending June 30, 2000.  Continued full-time employment
               after June 30, 2000 shall be subject to the terms and  conditions
               of the  existing  Employment  Agreement  until  a new  Employment
               Agreement  is  executed  by  and  between  the  Company  and  the
               Executive Officer, if one is executed at all;

          o    The  Company  will  annually   review  the  Executive   Officer's
               performance and determine whether or not the Executive Officer is
               entitled to receive an increase in salary for the following  year
               as well as a cash bonus for performance during the previous year;

          o    The Executive Officer is entitled to participate in the Company's
               Stock  Incentive  Plan and other  fringe  benefits,  although the
               Company  is not  obligated  to grant the  Executive  Officer  any
               option or an option  covering any particular  number of shares of
               common stock; and

          o    The Company may terminate the Employment Agreement only for cause
               upon 30 days written notice.

         The annual  salary  payable  to  each of Messrs. Tyner and Toal and Ms.
Greco is as follows:

          o    Mr. Tyner - $84,000 per year;

          o    Mr. Toal - $72,000 per year; and

          o    Ms. Greco - $72,000 per year.

                                       20
<PAGE>

         As  of  December 31,  2000,  the  Company  was  obligated  to  pay  the
foregoing  Executive Officers a total of $295,000 in salaries accrued but unpaid
for the period January 1, 1999 to December 31, 2000.

         The  Company  entered  into  an  Employment  Agreement  with  Glenn  E.
Glasshagel  on July 17, 2000.  Mr.  Glasshagel's  Employment  Agreement  has the
following principal terms and conditions:

          o    The term of the Employment Agreement is five years beginning July
               17, 2000 and ending June 30, 2005. Continued full-time employment
               after June 30, 2005 shall be subject to the terms and  conditions
               of the  existing  Employment  Agreement  until  a new  Employment
               Agreement  is  executed  by  and  between  the  Company  and  the
               Executive Officer, if one is executed at all;

          o    Mr. Glasshagel's annual salary is $150,000;

          o    The Company will annually review Mr. Glasshagel's performance and
               determine whether or not he is entitled to receive an increase in
               salary  for  the  following  year as  well  as a cash  bonus  for
               performance in the previous year. Mr.  Glasshagel is guaranteed a
               minimum  cash bonus of $50,000  for the first year of  employment
               under the Employment  Agreement.  Mr. Glasshagel received $25,000
               as an advance on the minimum  guaranteed  cash bonus on his start
               date with the Company;

          o    Mr.  Glasshagel is entitled to participate in the Company's Stock
               Incentive  Plan and other fringe  benefits.  Under the Employment
               Agreement Mr.  Glasshagel  is to receive an annual  minimum stock
               option for 25,000  shares of the  Company's  common  stock with a
               strike price equal to the average trading price for the Company's
               common stock on the date of grant; and

          o    The Company may terminate the Employment Agreement for cause upon
               30 days written  notice and without cause upon written notice and
               continuing all payments due under the Employment  Agreement for a
               period of 120 days.

1999 STOCK INCENTIVE PLAN

         In April 1999,  the  Company  adopted  the  1999 Stock  Incentive  Plan
(the "Plan").  The purposes of the Plan are to provide an  additional  incentive
for  directors,  officers,  employees and  consultants  to further the Company's
growth,  development and financial success by personally  benefiting through the
ownership of its securities,  and to enable the Company to obtain and retain the
services of directors,  officers, employees and consultants considered essential
to its long-term success.


                                       21
<PAGE>

         The Company has  reserved a total of  1,000,000  shares of common stock
for  issuance  under the Plan (after  giving  effect to the 2-for-1  stock split
effected  August 25,  1999)  either upon the exercise of options or as shares of
restricted  stock.  The Plan provides for  adjustment in the number of shares of
common stock  covered by the Plan in the event of,  amongst  other  things,  any
stock splits or stock dividends and any combinations or reclassifications of the
Company's common stock.

         Currently,  the Board  of Directors administers the  Plan, although the
Board may appoint a Committee to  administer  the Plan.  The  administrator  has
authority to construe and implement the Plan, to select the individuals eligible
for the grant of options  and the award of stock,  to  determine  the amount and
exercise price of options and other shares to be granted, to impose restrictions
on the  transferability  of the  options and shares and to  prescribe  all other
terms and conditions of each option granted under the Plan.

         The  administrator may grant options and award shares to the  Company's
directors,  officers,  employees  and  consultants.  As of the date  hereof,  no
directors,  officers,  employees or consultants have been granted any options or
issued any shares under the Plan.

         Stock Options

         Options   granted under the Plan  may  be incentive  stock  options  or
non-statutory  stock options for federal and state income tax purposes.  Options
granted  under  the  Plan  are not  transferable,  except  in the  event  of the
Optionee's death, and options may be exercised only within the period prescribed
by the administrator. The maximum term of any option is ten (10) years.

         The  administrator  of  the Plan  has  the discretion  to establish the
vesting schedule for any options. Generally options will vest at the rate of 20%
after  each year of  employment  but,  in the event of the  Company's  merger or
reorganization, the administrator may accelerate the vesting of the Options. The
administrator  may  provide  that the option  will  become  fully  vested on the
occurrence of a Change in Control,  which would generally include (a) a person's
acquisition of 25% or more of the Company's  outstanding voting securities;  (b)
the stockholders'  approval of our merger or consolidation  with or into another
corporation in which the Company's existing stockholders do not own at least 65%
of the voting  securities of the surviving  entity; or (c) over any two (2) year
period, a change in the majority of the Company's Board of Directors that is not
approved by at least two-thirds (2/3) of the Directors then in office.

         The   expiration  of  any  option  is  accelerated  if  the  optionee's
employment,  status as a director or consultant  terminates for any reason.  The
option must be exercised  within thirty (30) days  following  such  termination,
unless the termination is as a result of the optionee's death or disability,  in
which case the option  must be  exercised  within one (1) year after the date of
termination.


                                       22
<PAGE>

         The exercise price of an option is set by the administrator at the time
of grant. The option price may not be less than 100% of the fair market value of
common stock on the date of grant.  Payment of the  exercise  price of an option
may be made in whole or in part in the form of cash or our stock  (valued at its
then fair market value).

         Restricted Stock

         The  administrator may award shares under  the Plan on such  terms  and
conditions, as it deems appropriate. The shares may be awarded either as a stock
bonus for which the recipient  shall not be obligated to pay a purchase price or
as a stock  purchase in which case the  recipient  shall be  obligated  to pay a
purchase price  established by the  administrator,  which price may be less than
the then fair market value of the common stock.

         The recipient will be entitled  to vote all of  the shares  immediately
upon the award of the shares. The Administrator may provide that the recipient's
economic  interest in the shares will vest over a period of time,  provided that
such period shall not be longer than 20% per year over five years.

         In the event  of  the termination  of  the  stockholder's employment or
status  as a  director  or  consultant,  the  Company  shall  have the  right to
repurchase  any unvested  shares at a price equal to the purchase  price paid by
the stockholder.  The administrator  also may provide that, on the occurrence of
any such termination, the Company will have the right to repurchase, at its then
fair market value, any vested shares.

         Anti-takeover Impact of Change of Control Provision

         The  Plan  permits  the  administrator to accelerate the vesting of any
option  and  any  shares  on  the  occurrence  of  a  Change  in  Control.  Such
acceleration  of vesting  could have an  anti-takeover  effect and could make it
more  difficult for a third party to acquire  TravelnStore,  Inc. The Company is
not currently  discussing  or  negotiating  with any other person  regarding the
acquisition of TravelnStore,  Inc. or any similar  transaction that would result
in a Change in Control.

         Amendment and Termination

         The Company may amend or terminate the Plan at any time,  provided that
no outstanding option or shares may be adversely affected without the optionee's
or the  stockholder's  consent.  The approval of the Company's  stockholders  is
required only for  amendments  that increase the number of shares  available for
issuance under the Plan other than as a result of stock split,  recapitalization
or other change in our capital structure.  The Plan will automatically terminate
on December 31, 2009, unless it has previously been terminated;  but options and
shares then outstanding may be exercised and will remain  outstanding until they
expire or are terminated in accordance with their terms.


                                       23
<PAGE>

ITEM 12.      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table  indicates  the share  ownership  of  the Company's
common  stock,  as of March 23,  2001,  of persons  owning five percent or more,
directors  and  executive  officers  based  on  information  provided  by  these
individuals and all directors and executive officers as a group.

                                                                 Percentage
   Name of                                Amount                Ownership of
Beneficial Owner                    Beneficially Owned          Common Stock (1)
----------------                    ------------------          ----------------
Jim B. Tyner                             3,384,500                  33.9%
Scanlin 1989 Trust (2)                   2,059,607                  20.6%
Stevan M. Saylor (3)                     1,837,201                  18.4%
John R. Toal                               861,000                   8.6%
Yula Greco                                 861,000                   8.6%
Glenn E. Glasshagel                            -0-                     *
Richard A. Bush   (4)                       46,154                     *
James M. Kingzett                              -0-                     *
William E. Schenck                             -0-                     *

All executive officers and directors
 as a group (seven persons)              5,152,654                  51.6%

---------------
*  Less than 1%.

(1)  Ownership percentage is calculated on 9,985,608 shares of common stock.

(2)  Includes  (a) 16,107  shares of common  stock  issuable to the Scanlin 1989
     Trust upon conversion of the shares of Series A Preferred Stock held by him
     and (b) 75,000  shares of common  stock  issuable  in  connection  with the
     payment of Bridge Loans.

(3)  Includes  8,355  shares  of  common  stock  issuable  to  Mr.  Saylor  upon
     conversion of the shares of Series A Preferred Stock held by him.

(4)  Includes 23,077 shares owned by Mr. Bush's spouse, Deidre J. Bush. Mr. Bush
     has no ownership or voting rights on the shares owned by his spouse.


ITEM 13.      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         TravelnStore,  LLC (the "LLC"), a California limited liability company,
was organized on August 18, 1998, and is the  predecessor  to the Company.  By a
merger  of  the  LLC  into  the  Company,   effective  as  of  April  15,  1999,
TravelnStore,  Inc. acquired all of the LLC's business,  assets and liabilities.
In connection  with the merger,  the Company  issued to the members of the LLC a
total of 4,500,000  shares of the Company's common stock. The members of the LLC
had made an aggregate cash contribution to the LLC of $200 in exchange for their
membership  interests  in the LLC.  The  persons who were the members of the LLC
currently hold a majority of TravelnStore, Inc. outstanding common stock.

                                       24
<PAGE>

CONVERTIBLE NOTE TRANSACTIONS

         In separate  private  placements  that  commenced  in  September  1998,
January  1999 and  June  1999,  the  Company  issued  a total of 37  Convertible
Promissory  Notes (the "Notes") in the aggregate  principal  amount of $550,000.
Each Note has a face value of  $15,000.  $85,000 of the Notes have a coupon rate
of 8% per annum,  $465,000  of the Notes have a coupon  rate of 6% per annum and
all of the Notes are all due and payable on December 31, 2000. One Note was only
partially  funded to the extent of $7,500.  The portion of the Note that was not
funded  through  cash  payments was treated as  compensation  expense paid to an
Executive  Officer.  The Company  used the  proceeds of these Loans to cover its
initial operating  expenses and for general working capital purposes,  including
the payment of  Executive  Officers'  salaries.  No  significant  portion of the
proceeds was used to fund the  acquisitions  of capital  equipment.  Each of the
Notes was issued in exchange for cash, the  forgiveness of debt or a combination
thereof in an amount equal to the  principal  amount of the Note.  Under each of
the  placements,  the amount  payable at December 31,  2000,  on maturity of the
Notes,  will  depend on whether or not the Company  has  completed a  registered
public offering of its common stock.

         The Notes issued  under each of the  placements  may be converted  into
shares of common stock following the date on which a registered  public offering
of the Company's common stock is declared effective.  For the Notes issued under
the placement that commenced in September, 1998, the holder may convert the Note
into that number of shares of the Company's  common stock determined by dividing
the sum of  $150,000  by the price at which the  Company  issues  the  shares of
common stock in the registered offering; provided that the number of shares that
are issuable upon such conversion  shall be  appropriately  pro-rated to reflect
any partial payments on the Note prior to the date of conversion.  For the Notes
issued under the  placements  that  commenced in January 1999 and June 1999, the
holder may convert the Note into that number of shares of the  Company's  common
stock  determined  by  dividing  the sum of  $50,000  by the  price at which the
Company issues the shares of common stock in the registered  offering,  provided
that the  number of shares  that are  issuable  upon  such  conversion  shall be
appropriately pro-rated to reflect any partial payments on the Note prior to the
date of  conversion.  In  anticipation  that the  offering  price for any shares
issued in a  registered  offering  would be $6.50 per  share,  the  Company  has
reserved for issuance on  conversion  of the Notes a total of 376,923  shares of
common  stock.  The  Company  will  appropriately  adjust  the  number of shares
reserved  to reflect the actual  offering  price and the then  aggregate  amount
payable under the Notes.

         As of March 23, 2001,  holders of 35 Notes, in the aggregate  principal
amount of  $490,000,  have  converted  their Notes into an  aggregate of 346,146
shares of common  stock.  As of March 23, 2001,  and after giving  effect to the
foregoing  conversions,  there remained  outstanding  two Notes in the aggregate
principal  amount of $60,000 which, if converted,  would require the issuance of
an additional 30,769 shares of the Company's common stock.


                                       25
<PAGE>

         In a private placement  Funding  Agreement that commenced  December 21,
1999,  the Company  issued a Note in the amount of $350,000 in exchange for cash
consideration.  The Note has a coupon rate of 8% per annum and the principal and
accrued  interest was due May 30, 2000. At any time the Note holder can elect to
convert the Note plus  accrued  interest  into 175,000  shares of the  Company's
common stock for the principal  amount due plus an  additional  amount of shares
for the interest  accrued on the principal at the time of  conversion.  The Note
may be converted to the  Company's  common stock in parts or the entire  amount.
During the first quarter of 2001 the aggregate  principal  amount of $250,000 of
the Note was converted  into 125,000  shares of the  Company's  common stock and
15,000  shares of the  Company's  common  stock was issued for the  interest due
thereon, for a total of 140,000 issued under the Note conversion.

OPTION SWEEPSTAKES

         In connection with the commencement of the  TravelnStore.com  Web site,
the  Company  conducted a  sweepstakes  under which it  solicited  entries  from
visitors to the Web site.  The Company  granted to one  visitor,  whose name was
drawn at  random  from the list of all  participating  visitors,  an  option  to
purchase  shares of the  Company's  common  stock as is  determined  by dividing
$1,000,000  by the price at which the shares of the  Company's  common stock are
issued to the public through a public stock  offering.  The Company has reserved
for issuance  under the option  153,846  shares of common  stock.  The aggregate
exercise price of the Option is $100.00.

     The option holder has agreed that:

     o    They will not  transfer  all or any  portion of their  interest in the
          option  other  than by will or the laws of descent  and  distribution,
          without the Company's prior written consent; and

     o    They  will not  publicly  offer or sell any  shares  of  common  stock
          acquired  on  exercise  of the option for a period of 180 days after a
          registration  statement  to sell  the  Company's  common  stock to the
          public is declared  effective,  without the  Company's  prior  written
          consent.

         If the Company does not effect a public offering of its common stock by
December 31,  2000,  the option will expire on December 31, 2000 and the Company
will pay the holder of the option $25,000 in cash.

         The Company  commenced the sweepstakes on November 1, 1998 and made the
drawing on January 31, 1999.  Entrant's were required  merely to register at the
TravelnStore.com Web site by leaving their email address and were not obligated,
then or thereafter,  to provide any other particular information to the Company,
purchase any goods or services,  pay the Company any amount or otherwise provide
it any  particular  consideration.  The  Company  does not intend to conduct any
other  sweepstakes  in which it will  grant  any  options  or  issue  any  other
securities to any  participant.  It is possible that the grant of the option did
not comply with the  registration  requirements  of the  Securities Act of 1933.
Because  the Company  granted  only one option,  did not  receive,  and will not
receive,  any  tangible  property on the grant or  exercise  of the option,  the
Company  does not  intend to offer the holder of the option the right to rescind
the grant of the option.

                                       26
<PAGE>

STOCKHOLDER LOANS

         In connection  with the Company  borrowing a total of $140,000 from two
of its  principal  stockholders,  the Company  issued to such  stockholders,  as
additional  consideration  for the loans,  a total of  400,000  shares of common
stock.  Notes  issued for a total of  $100,000  were due and payable on June 30,
1999, and bearing interest at the rate of 10% per annum. One of the Notes issued
for $40,000 was due and payable on December  31, 1999,  bearing  interest at the
rate of 10% per annum and is convertible at the holder's option into Convertible
Notes issued in the September 1998 private  placement (which is described above)
in the aggregate  principal amount of $75,000.  Effective as of August 25, 1999,
all of these Notes were  converted into an aggregate of 8,154 shares of Series A
Preferred  Stock.  The shares of Series A Preferred Stock are  convertible  into
24,462 shares of common stock.

BRIDGE LOAN NOTES

         Between  September 23, 1999 and December 31, 2000, the Company borrowed
a total of $1,353,500  from various  investors and in exchange issued a total of
37 Promissory  Notes (the "Notes").  These Notes bear interest at the rate of 8%
per annum, do not require monthly or periodic payments of principal or interest,
and are all due and payable on the date that is 30 days after  final  closing of
the Company's  Initial Public  Offering.  Upon payment of the Notes, the Company
will issue to the Note holders, in addition to the principal amount of the Notes
and  accrued  interest,  from  3,500 to 5,000  shares of  common  stock for each
$25,000  principal amount of the Notes in the principal amount of $1,268,500 and
20,000  shares for one Note in the principal  amount of $85,000,  for a total of
340,750 shares of common stock. One Note was only partially funded to the extent
of $10,000.  The Company is treating the portion of the Note that was not funded
through  cash  payments  as a $5,000  general  and  administrative  expense  for
services performed by a supplier.

CONSULTANCY AGREEMENTS

         On  July 6, 1998,  TravelnStore,  LLC, the predecessor to TravelnStore,
Inc., entered into Independent  Contractor  Agreements with Stevan M. Saylor and
Donald G. Scanlin. Both Mr. Scanlin and Mr. Saylor were founders of TravelnStore
LLC and are principal stockholders of TravelnStore, Inc. Under these Agreements,
Mr. Scanlin and Mr. Saylor provided  consultancy  services to TravelnStore,  LLC
during its  formation  and through the period ended June 30,  1999.  Each of the
Consulting  Agreements  has  terminated  and the  Company  is not  obligated  to
continue  to retain or to employ  either or both of Messrs.  Scanlin and Saylor.
Both Mr. Scanlin and Mr. Saylor have significant  business experience from which
TravelnStore, Inc., and its predecessor have benefited. Their duties, under each
of their respective  agreements,  were to provide general business and marketing
advice at the request and  direction of the officers of  TravelnStore,  Inc. For
their services,  each is to receive $25,000 payable on the successful completion
of the Company's Initial Public Offering. TravelnStore, Inc. does not anticipate
renewing or  negotiating  any  further  consultancy  agreements  with either Mr.
Scanlin or Mr.  Saylor since the services  which they have provided have or will
be assumed by full-time employees of the Company.

                                       27
<PAGE>

TRADEMARK LICENSE AGREEMENT

         TravelnStore,  Inc. utilizes the World Key trademark held by World Key,
Inc., an affiliated company of TravelnStore, Inc., as part of agency recruitment
efforts and as the brand name for the World Key Agency Group consortium. Under a
Trademark  License  Agreement with World Key, Inc. dated September 24, 1999, the
Company  acquired  the  exclusive  right to use the "WORLD  KEY"  trademark  and
service mark in the United States.  The principal terms of the Trademark License
Agreement are as follows.

          o    The term of the  license  is  perpetual,  subject to the right of
               either party to terminate the license for cause.

          o    The licensed territory is the United States.

               o    The Company has the right to  sublicense  the  Trademark for
                    use by retail travel agencies participating in its World Key
                    Agency Group network of agencies.

          o    Royalties that the Company has to pay are as follows:

          o    No royalties are due until the first sublicense is granted by the
               Company, which occurred in July, 2000;

          o    Upon  grant  of the  first  sublicense,  the  Company  will pay a
               license fee of $25,000, which has been paid; and

               o    Thereafter,  the Company will have to pay an annual  royalty
                    of $250 per retail travel agency who is participating in the
                    World  Key  Agency   Group  and  to  whom  the  Company  has
                    sublicensed  the  Trademark.  As of  December  31,  2000 the
                    Company has paid  approximately  $31,000 in royalties  under
                    this agreement.

          o    TravelnStore,  Inc. has the option to acquire the Trademark  from
               World Key, Inc. on the following terms:

          o    The Company must  exercise the option  within 36 months after the
               date of the Trademark License Agreement, that is by September 30,
               2002;

          o    The Company  must pay World Key,  Inc. a purchase  price equal to
               the sum of:

          o    The product  obtained  by  multiplying  $2,500,  by the number of
               sublicenses  that are  outstanding as of the date of the exercise
               of the option; and

                                       28
<PAGE>

               o    The product obtained by multiplying $2,500, by the number of
                    sublicenses  that are granted after the date of the exercise
                    of the option and prior to September 30, 2004; or

               o    TravelnStore,  Inc.  can pay the  purchase  price  either in
                    cash,  or as  long as the  trading  price  of the  Company's
                    common  stock is at least  $5.00  per  share,  in  shares of
                    common  stock,  which have an  aggregate  value equal to the
                    purchase price.

         The Company  believes that the "WORLD KEY"  trademark  has  significant
value and will  facilitate  the  Company's  establishment  of the retail  travel
agency  network.  At the same time,  the Company has  attempted to structure the
Trademark  License  Agreement so that its  obligations  are  manageable  and are
proportionate  to its use of the Trademark and the benefit the Company  realizes
from the agency network.

         Jim B. Tyner,  Chairman of the Board of Directors  and Chief  Executive
Officer of the Company, Yula Greco, Vice President,  Secretary, Controller and a
director of the Company and John R. Toal, President, Chief Operating Officer and
a director of the Company, are also principal shareholders of World Key, Inc. Of
a total of 6.0 million shares outstanding of World Key, Inc., Jim B. Tyner, Yula
Greco and John R. Toal are the  beneficial  owners of 1.8  million  shares,  1.4
million shares and 120,000 shares, respectively. Jim B. Tyner and Yula Greco are
also officers of World Key, Inc.


                                       29
<PAGE>


                                     PART IV

ITEM 14.      FINANCIAL STATEMENTS AND EXHIBITS

     (a) List of Documents Filed as Part of This Report:

     1.   Consolidated Financial Statements.

          The Consolidated  Financial  Statements are listed in the accompanying
          "Index to Financial Statements."

     2. Financial Statement Schedules.

          Financial Statement Schedules are listed in the accompanying "Index to
          Financial Statements."

     3. Exhibits

          The exhibits  filed with or  incorporated  by reference in this report
          are as follows:


                                       30
<PAGE>


                                INDEX TO EXHIBITS


EXHIBIT NUMBER                             DESCRIPTION
--------------------------------------------------------------------------------

2      Merger Agreement dated April 15, 1999, between TravelnStore. com,  LLC, a
       California limited liability company, and TravelnStore, Inc., a
       California corporation*

3      Charter Documents

       3.1       Articles of Incorporation as filed March 4, 1999*

       3.2       Certificate of Amendment and Restatement of Articles of
                 Incorporation as filed August 25, 1999*

       3.3       Bylaws*

       3.4       Certificate of Amendment of Articles of Incorporation as filed
                 May 30, 2000*

4      Instruments defining rights of holders

       4.1       Form of Convertible Promissory Note issued September 1998*

       4.2       Form of Convertible Promissory Note issued January 1999*

       4.3       Form of Subscription Agreement*

       4.4       Form of Certificate for common stock*

       4.5       Form of Convertible Promissory Note issued June 1999*

       4.6       Form of Notice of Conversion regarding Convertible Promissory
                 Notes*

       4.7       Promissory Notes issued to Scanlin 1989 Trust*

       4.8       Promissory Notes issued to Stevan Saylor*

       4.9       Form of Notice of Conversion regarding Promissory Notes issued
                 to Scanlin 1989 Trust and Stevan Saylor*

       4.10      Form of Convertible Promissory Note issued September 1999*

       4.11      Form of Bridge Loan Promissory Note*


                                      31
<PAGE>

EXHIBIT NUMBER                             DESCRIPTION
--------------------------------------------------------------------------------

10     Material Contracts

       10.3      1999 Stock Incentive Plan**

       10.5      Independent Contractor Agreement with Donald Scanlin*

       10.6      Independent Contractor Agreement with Stevan Saylor*

       10.7      Stock Option Granted to Stoltenberg*

       10.8      Operating  Agreement  between TravelnStore, Inc. and World Key,
                 Inc.dated September 8, 1998*

       10.10     Employment Agreement with Jim Tyner dated August 1, 1999*

       10.11     Employment Agreement with John Toal dated August 1, 1999*

       10.12     Employment Agreement with Yula Greco dated August 1, 1999*

       10.14     Trademark License Agreement between World Key, Inc. and
                 TravelnStore, Inc. dated September 25, 1999*

       10.17     Memorandum  of Lease dated  November 8, 1999,  between  Diane
                 Hedrick Bovee,  Trustee of the  Bovee/Hedrick Family Trust
                 dated  5/2/90, as Lessor, and TravelnStore, Inc., as Lessee*

       10.18     Loan Agreement dated December 21, 1999.*

       10.19     Modification  of Loan Agreement dated May 11, 2000, relating to
                 Loan Agreement dated December 21, 1999.*

     *   Previously filed with the Securities and Exchange Commission and
          incorporated herein by reference.

     (b)  REPORTS ON FORM 8-K:

         The  Company  did  not  file  any  reports  on Form 8-K during the last
quarter of its fiscal year ended December 31, 2000.

                                       32
<PAGE>


                          Index To Financial Statements

                                                                      Page
                                                                      ----
Independent Auditors' Report                                       F-1 to F-2

Financial Statements:

Balance Sheet, December 31, 2000                                      F-3

Statements of Operations
  For the Years Ended December 31, 2000 and 1999                      F-4

Statements of Shareholders' Deficit
  For the Years Ended December 31, 2000 and 1999                      F-5

Statements of Cash Flows
  For the Years Ended December 31, 2000 and 1999                  F-6 to F-7

Notes to Financial Statements                                     F-8 to F-18




                                       33
<PAGE>



INDEPENDENT AUDITORS' REPORT


To  the Board of Directors of TravelnStore, Inc.:

We have  audited the  accompanying  balance  sheet of  TravelnStore,  Inc.  (the
"Company")  as of December 31, 2000 and the related  statements  of  operations,
shareholders' deficit and cash flows for the year ended December 31, 2000. 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 audit.

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

In our  opinion,  the  financial  statements  present  fairly,  in all  material
respects,  the financial position of the Company as of December 31, 2000 and the
results of its  operations  and its cash flows for the year ended  December  31,
2000 in conformity with generally accepted accounting principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 1 to the
financial  statements,  the Company has incurred  losses and negative cash flows
from  operations  since  inception,  and as of December 31, 2000,  has a working
capital deficit of $4,594,765,  $1,513,500 of notes payable in default and has a
shareholders'  deficit of $4,512,397.  These conditions raise  substantial doubt
about its ability to continue as a going concern.  Management's  plans in regard
to these matters are also  described in Note 1. The financial  statements do not
include any adjustments that might result from the outcome of this uncertainty.


Stonefield Josephson, Inc.
Santa Monica, California
April 9, 2001





                                      F-1
<PAGE>






INDEPENDENT AUDITORS' REPORT


To  the Board of Directors of TravelnStore, Inc.:

We have audited the accompanying statements of operations, shareholders' deficit
and cash flows of  TravelnStore,  Inc.  (formerly  TravelnStore.com,  Inc.) (the
"Company") for the year ended December 31, 1999. 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 audit.

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

In our  opinion,  the  financial  statements  present  fairly,  in all  material
respects,  the  results  of  operations  and cash  flows of  TravelnStore,  Inc.
(formerly  TravelnStore.com,  Inc.)  for the year  ended  December  31,  1999 in
conformity with generally accepted accounting principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 1 to the
financial  statements,  the Company has incurred  losses from  operations  since
inception,  has a working  capital deficit of $1,172,116 and has a shareholders'
deficit of  $1,147,115.  These  conditions  raise  substantial  doubt  about its
ability to  continue  as a going  concern.  Management'  plans  regarding  those
matters also are  described in Note 1. The  financial  statements do not include
any adjustments that might result from the outcome of this uncertainty.


Farber & Hass LLP
April 7, 2000
Oxnard, California










                                      F-2
<PAGE>

                               TRAVELNSTORE, INC.
                                  Balance Sheet
                                December 31, 2000

ASSETS
Current Assets:
  Accounts Receivable                                              $     21,556
  Advances Due from Employee                                             25,000
  Due from Related Party                                                320,303
                                                                   ------------
    Total Current Assets                                                366,859

Furniture and Equipment, Net                                             79,807

Other Assets                                                             34,460
                                                                   ------------
    TOTAL ASSETS                                                   $    481,126
                                                                   ============

LIABILITIES AND SHAREHOLDERS' DEFICIT
Current Liabilities:
  Book Overdraft                                                   $     45,980
  Accounts Payable and Accrued Expenses                               1,858,881
  Interest Payable                                                      145,121
  Notes Payable, Current Portion                                      2,511,992
  Notes Payable, Related Parties                                        349,650
  Accrued Expenses, Related Parties                                      50,000
                                                                   ------------
    Total Current Liabilities                                         4,961,624

Notes Payable, Less Current Portion                                      31,899
                                                                   ------------
    Total Liabilities                                                 4,993,523
                                                                   ------------
Shareholders' Deficit:
  Convertible Preferred Stock, No Par Value; 1,000,000
    Shares Authorized; 8,154 Shares Issued and Outstanding              150,887
  Common Stock, No Par Value; 20,000,000 Authorized;
    9,400,000 Shares Issued and Outstanding                           3,931,700
  Common Stock Subscribed, 340,750 Shares                             1,353,500
  Accumulated Deficit                                                (9,948,484)
                                                                   ------------
    Total Shareholders' Deficit                                      (4,512,397)
                                                                   ------------
    TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT                    $    481,126
                                                                   ============


                 See accompanying notes to financial statements.

                                       F-3

<PAGE>

                               TRAVELNSTORE, INC.
                            Statements of Operations
                 For the Years Ended December 31, 2000 and 1999

                                                      2000             1999
                                                  ------------     ------------
Revenues                                          $     43,044     $     59,385
                                                  ------------     ------------
Operating Costs:
  Selling, General and Administrative
    Expenses                                         4,331,689          997,134
  Write-Off of Deferred Offering Costs                 420,142                -
                                                  ------------     ------------

Total Operating Costs                                4,751,831          997,134
                                                  ------------     ------------

Loss from Operations                                (4,708,787)        (937,749)
                                                  ------------     ------------
Interest Expense:
   Fair Value of Beneficial Conversion
     Feature:
       Convertible Debentures                                -        1,960,000
       Funding Agreement                               237,500          112,500
   Bridge Loans - Stock Bonuses                        963,500          390,000
   Stock Dividend on Convertible
     Debentures                                              -            4,000
   Discount for Shares Sold at Below
     Market Value by Founding
     Shareholders                                      150,000                -
   Other Interest Expense                              123,995           36,683
                                                  ------------     ------------

     Total Interest Expense                          1,474,995        2,503,183
                                                  ------------     ------------

Loss Before Provision for Income Taxes              (6,183,782)      (3,440,932)

Provision for Income Taxes                                   -              800
                                                  ------------     ------------

Net Loss                                          $ (6,183,782)    $ (3,441,732)
                                                  ============     ============

Basic and Diluted Loss per Common Share           $      (0.66)    $      (0.37)
                                                  ============     ============
Weighted-Average Common Shares
Outstanding, Both Basic and Diluted                  9,400,000        9,400,000
                                                  ============     ============


                 See accompanying notes to financial statements.

                                       F-4

<PAGE>
<TABLE>
<CAPTION>
                                                          TRAVELNSTORE, INC.
                                             Statement of Changes in Shareholders' Deficit
                                            For the Years Ended December 31, 2000 and 1999

                                       Convertible                                        Common
                                     Preferred Stock           Common Stock          Stock Subscribed
                                    ------------------    -----------------------   --------------------   Accumulated
                                    Shares     Amount       Shares      Amount      Shares      Amount       Deficit        Total
                                    ------   ---------    ---------    ----------   -------   ----------   -----------  -----------
<S>                                 <C>      <C>          <C>          <C>          <C>       <C>          <C>          <C>
 Balance, January 1, 1999                -   $       -            -    $      200         -   $        -   $  (322,970) $  (322,770)

 Preferred Stock Note Conversion     8,154     150,887            -             -         -            -             -      150,887

 Common Stock Issued to Acquire
   TravelnStore LLC                      -           -    9,000,000             -         -            -             -            -

 Fair Value of Beneficial
   Conversion Feature:
     Convertible Debentures              -           -            -     1,960,000         -            -             -    1,960,000
     Funding Agreement                   -           -            -       112,500         -            -             -      112,500

 Stock Dividend on Convertible
   Debentures                            -           -      400,000         4,000         -            -             -        4,000

 Bridge Loan Shares Subscribed           -           -       60,000       390,000         -            -             -      390,000

 Net Loss                                -           -            -             -         -            -    (3,441,732)  (3,441,732)
                                    ------   ---------    ---------    ----------   -------   ----------   -----------  -----------
 Balance, December 31, 1999          8,154     150,887    9,460,000     2,466,700         -            -    (3,764,702)  (1,147,115)

 Fair Value of Beneficial
   Conversion Feature -
      Funding Agreement                  -           -            -       237,500         -            -             -      237,500

 Fair Value of Options Issued            -           -            -         5,000         -            -             -        5,000

 Subscribed Shares                                          (60,000)     (390,000)   60,000      390,000             -            -

 Bridge Loans - Stock Bonuses            -           -            -             -   280,750      963,500             -      963,500

 Corporate Expense - Paid by
  Founders                               -           -            -     1,462,500         -            -             -    1,462,500

 Discount for Shares Sold at
  Below Market Value by
  Founding  Shareholders                 -           -            -       150,000         -            -             -      150,000

 Net Loss                                -           -            -             -         -            -    (6,183,782)  (6,183,782)
                                    ------   ---------    ---------    ----------   -------   ----------   -----------  -----------
Balance, December 31, 2000           8,154   $ 150,887    9,400,000    $3,931,700   340,750   $1,353,500   $(9,948,484) $(4,512,397)
                                    ======   =========    =========    ==========   =======   ==========   ===========  ===========
</TABLE>

                 See accompanying notes to financial statements.

                                       F-5

<PAGE>
<TABLE>
<CAPTION>
                               TRAVELNSTORE, INC.
                            Statements of Cash Flows
                 For the Years Ended December 31, 2000 and 1999

                                                            2000            1999
                                                         -----------    -----------
<S>                                                      <C>            <C>
Cash Flows from Operating Activities:
  Net Loss                                               $(6,183,782)   $(3,441,732)
  Adjustments to Reconcile Net Loss to Net Cash
    Used by Operating Activities:
      Depreciation and Amortization                           18,579          3,332
      Fair Value of Beneficial Conversion Feature:
        Convertible Debentures                                     -      1,960,000
        Funding Agreement                                    237,500        112,500
        Bridge Loans - Stock Bonuses                         963,500        390,000
      Discount for Shares Sold at Below Market Value
       by Founding Shareholders                              150,000              -
      Corporate Expense - Paid by Founders                 1,462,500              -
      Stock Dividend on Convertible Debentures                     -          4,000
      Other                                                    5,000         10,887
  Changes in Assets and Liabilities:
    (Increase) Decrease:
      Accounts Receivable                                    (21,371)             -
      Prepaid Expenses and Other Current Assets              206,527       (206,527)
    Increase (Decrease):
      Book Overdraft                                               -         10,383
      Accounts Payable and Accrued Expenses                1,320,830        503,105
      Interest Payable                                       115,443         25,681
      Income Taxes Payable                                         -           (889)
      Deferred Income                                         (9,399)       (24,921)
      Other                                                        -         (8,037)
                                                         -----------    -----------
      Net Cash Used in Operating Activities               (1,734,673)      (662,218)
                                                         -----------    -----------
Cash Flows from Investing Activities:
  Advances Due from Employee                                 (25,000)             -
  Net Loans to Related Party                                (141,297)             -
  Purchase of Furniture and Equipment                        (34,139)             -
  Other Assets                                               (32,764)             -
                                                         -----------    -----------
    Net Cash Used in Investing Activities                   (233,200)             -
                                                         -----------    -----------
</TABLE>


                See accompanying notes to financial statements.

                                      F-6
<PAGE>

<TABLE>
<CAPTION>
                               TRAVELNSTORE, INC.
                            Statements of Cash Flows (continued)
                 For the Years Ended December 31, 2000 and 1999

                                                            2000            1999
                                                         -----------    -----------
<S>                                                      <C>            <C>
Cash Flows from Financing Activities:
  Book Overdraft                                              35,597              -
  Net Borrowings from Related Parties                        323,000         25,600
  Proceeds from Notes Payable                              1,617,950        800,000
  Repayments of Notes Payable                                 (8,674)             -
  Net Loans to Related Party                                       -       (182,242)
                                                         -----------    -----------
    Net Cash Provided by Financing Activities              1,967,873        643,358
                                                         -----------    -----------

Increase (Decrease) in Cash                                        0        (18,860)

Cash at Beginning of Period                                        0         18,860
                                                         -----------    -----------
Cash at End of Period                                    $         0    $         0
                                                         ===========    ===========

Supplementary Disclosure of Cash Flow Information:
  Cash Paid During the Year for:
    Interest                                             $     4,931    $         0
                                                         ===========    ===========
    Income Taxes                                         $         0    $     1,600
                                                         ===========    ===========
</TABLE>

Non-Cash Financing Activity:

1.   In July 1999, two  shareholders  exercised  options to convert $ 150,887 of
     convertible debt and interest into Series A Preferred Stock.

2.   In January 1999,  the Company issued 400,000 shares (after giving effect to
     the Company's August 1999 two-for-one  split) of common stock as a dividend
     to two note holders.

3.   In December 1999, the Company acquired furniture and fixtures in the amount
     of $49,614 in exchange for a note to a private party.


                 See accompanying notes to financial statements.

                                       F-7

<PAGE>

                               TRAVELNSTORE, INC.
                          Notes to Financial Statements

1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         DESCRIPTION OF BUSINESS - TravelnStore, Inc. (the "Company") operates a
         retail  travel agency  consortium  known as the World Key Agency Group.
         The  Company  has in its  consortium  approximately  130 retail  travel
         agencies located in the United States.

         In March 1999,  the Company  acquired 100% of the members'  interest in
         Travelnstore  LLC in exchange for  9,000,000  shares  (adjusted for the
         stock split on August 25,  1999) of the  Company's  common  stock.  The
         Company's   shareholders   owned  100%  of  the  members'  interest  in
         Travelnstore LLC.

         Because  Travelnstore  LLC  was  acquired  from  related  parties,  the
         acquisition  was reflected using the recorded assets and liabilities of
         Travelnstore  LLC and accounted for in a manner similar to a pooling of
         interest.  The Company had no operations  prior to the  acquisition  of
         Travelnstore LLC.

         BASIS OF  PRESENTATION  - As  reflected in the  accompanying  financial
         statements, the Company has had, since inception, recurring losses from
         operations, negative cash flow from operations, its current liabilities
         exceed its current  assets and the Company is  delinquent in payment of
         certain notes and accounts  payable.  These  matters raise  substantial
         doubt about the Company's  ability to continue as a going concern.  The
         Company  expects to continue to incur such losses  unless and until its
         retail travel  agency  consortium  achieves  commercial  viability.  In
         addition, a significant portion of its contributed capital was advanced
         to a related party (see Note 2).

         The  accompanying  financial  statements  were  prepared  assuming  the
         Company  will  continue  to  operate  on  a  going-concern  basis.  The
         continued  operation  of the  Company is  dependent  upon  management's
         ability to raise  additional  capital and generate  positive cash flows
         from   operations.   The  financial   statements  do  not  include  any
         adjustments   related  to  the  recoverability  and  classification  of
         recorded asset amounts and classification of liabilities which would be
         required if the  Company  were unable to realize its assets and satisfy
         its liabilities and obligations in the normal course of business.


                                      F-8
<PAGE>

         Management  plans to take,  or has taken the  following  steps  that it
         believes  will be sufficient to provide the Company with the ability to
         continue its existence:

          o    The  Company  is seeking  additional  cash  investments  into the
               Company  through  sale of its  common  stock  by  either  private
               placements or though a public offering.  The Company is seeking a
               minimum   of   approximately   $3  million   from  such   capital
               investments.

          o    In the first  quarter of 2001 the Company  converted  $740,000 of
               convertible  note  obligations  into 346,146 shares of its common
               stock to reduce the Company's  cash  requirements  (see Note 10 -
               "Subsequent Events").

          o    The  Company  is   evaluating   the  lowest   level  of  employee
               requirements  to operate  the Company  effectively  to reduce the
               Company's cash requirements.

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

         FAIR  VALUE  OF  FINANCIAL  INSTRUMENTS  -  The  Company  measures  its
         financial assets and liabilities in accordance with generally  accepted
         accounting   principles.   For  certain  of  the  Company's   financial
         instruments,  including accounts receivable,  book overdraft,  accounts
         payable and accrued  expenses,  the carrying  amounts  approximate fair
         value due to their short  maturities.  The amounts  owed for  long-term
         debt  also  approximate  fair  value  because  current  rates and terms
         offered to the Company are at current market rates.

         COMPREHENSIVE  INCOME - As of December  31, 2000 and 1999,  the Company
         had  no  transactions  that  represented   comprehensive   income  and,
         therefore,  has not included a schedule of comprehensive  income in the
         accompanying financial statements.

         ACCOUNTING  FOR  CONVERTIBLE  DEBT  SECURITIES - The Company has issued
         convertible  debt securities with a non-detachable  conversion  feature
         that was "in the money" at the date of issue.  The Company accounts for
         such securities in accordance with Emerging Issues Task Force 98-5. The
         Company  has  recorded  the  fair  value of the  beneficial  conversion
         feature as interest expense and an increase to common stock.

         FURNITURE  AND  EQUIPMENT - Furniture  and equipment are stated at cost
         with  depreciation  provided  over the  estimated  useful  life of five
         years, using the straight-line method.


                                      F-9
<PAGE>

         REVENUE  RECOGNITION  - The  Company  has  entered  into  a  number  of
         contracts with travel  service  providers for the benefit of the retail
         travel  agencies  that are members of the World Key Agency  Group,  the
         Company's  travel  agency  consortium.  Based on the use of the  travel
         service  providers by the World Key Agency Group retail  travel  agency
         members,  the  Company  earns an  override  commission  from the travel
         service  provider.  Such  override  commissions  are  recognized in the
         period they are earned.

         ADVERTISING  -  Costs   incurred  for   producing   and   communicating
         advertising  are  expensed  when  incurred  and are included in selling
         expense.  Advertising  expense amounted to $257,633 in 2000 and $10,107
         in 1999.

         INCOME  TAXES - The  Company  accounts  for its income  taxes under the
         provisions of SFAS No. 109. The method of  accounting  for income taxes
         under  SFAS No.  109 is an asset and  liability  method.  The asset and
         liability  method  requires the recognition of deferred tax liabilities
         and  assets  for the  expected  future tax  consequences  of  temporary
         differences  between tax bases and financial  reporting  bases of other
         assets and liabilities.

         RECLASSIFICATIONS - Certain prior year balances  have been reclassified
         to conform to the current year presentation.

         NEW  ACCOUNTING  PRONOUNCEMENTS  - In December 1999, the Securities and
         Exchange  Commission (the Commission) issued Staff Accounting  Bulletin
         No. 101, Revenue  Recognition in Financial  Statements,  which is to be
         applied  beginning  with the  fourth  fiscal  quarter  of fiscal  years
         beginning  after  December 15,  1999,  to provide  guidance  related to
         recognizing revenue in circumstances in which no specific authoritative
         literature  exists.  The adoption by the Company in the  application of
         the Staff Accounting Bulletin to the Company's financial statements did
         not have a material change  in  the  amount  of  revenues  th e Company
         ultimately realized.

         In March 2000, the Financial  Accounting  Standards Board (FASB) issued
         FASB Interpretation No. 44 (Interpretation 44), "Accounting for Certain
         Transactions Involving Stock Compensation".  Interpretation 44 provides
         criteria  for  the  recognition  of  compensation  expense  in  certain
         stock-based compensation  arrangements that are accounted for under APB
         Opinion No. 25, Accounting for Stock-Base Compensation.


                                      F-10
<PAGE>

         In June 1998, the Financial  Accounting Standards Board issued SFAS No.
         133,  "Accounting for Derivative  Instruments and Hedging  Activities."
         SFAS No. 133, as amended by SFAS No. 137, is effective for fiscal years
         beginning  after June 15,  2000.  SFAS No. 133  requires the Company to
         recognize all  derivatives as either assets or liabilities  and measure
         those  instruments  at fair value.  It further  provides  criteria  for
         derivative  instruments  to be designated as fair value,  cash flow and
         foreign currency hedges and establishes respective accounting standards
         for reporting changes in the fair value of the derivative  instruments.
         Upon  adoption,   the  Company  will  be  required  to  adjust  hedging
         instruments  to fair  value in the  balance  sheet  and  recognize  the
         offsetting  gains or losses as adjustments to be reported in net income
         or  other  comprehensive   income,  as  appropriate.   The  Company  is
         evaluating its expected  adoption date and currently  expects to comply
         with the requirements of SFAS 133 in fiscal year 2001. The Company does
         not expect the  adoption  will be material to the  Company's  financial
         position or results of operations since the Company does not believe it
         participates in such activities.

         In January 2001,  the Financial  Accounting  Standards  Board  Emerging
         Issues Task Force  issued EITF 00-27  effective  for  convertible  debt
         instruments issued after November 16, 2000. This pronouncement requires
         the use of the intrinsic value method for recognition of the detachable
         and imbedded equity features included with  indebtedness,  and requires
         amortization of the amount associated with the  convertibility  feature
         over the life of the debt  instrument  rather than the period for which
         the  instrument  first  becomes  convertible.   Inasmuch  as  all  debt
         instruments  that were  entered into prior to November 16, 2000 and all
         of the debt discount relating to the beneficial  conversion feature was
         previously recognized as expense in accordance with EITF 98-5, there is
         no impact on these financial statements.  This EITF 00-27, could impact
         future  financial  statements,  should  the  Company  enter  into  such
         agreements.

2.       DUE FROM RELATED PARTY

         The Company makes periodic working capital advances to World Key, Inc.,
         a related  party.  The advances are repaid when funds are available and
         are payable upon demand.

         The Company utilizes the World Key trademark held by World Key, Inc. as
         part of agency recruitment  efforts and as the brand name for the World
         Key Agency Group  consortium.  Under a Trademark License Agreement with
         World Key,  Inc.  dated  September 24, 1999,  the Company  acquired the
         exclusive  right to use the "WORLD KEY"  trademark  and service mark in
         the United States.
         The principal terms of the Trademark License Agreement are as follows:

          o    The term of the  license  is  perpetual,  subject to the right of
               either party to terminate the license for cause.

          o    The licensed territory is the United States.


                                      F-11
<PAGE>

          o    The Company has the right to sublicense  the Trademark for use by
               retail  travel  agencies  participating  in its World Key  Agency
               Group network of agencies.

          o    Royalties that the Company has to pay are as follows:

               o    No royalties  are due until the first  sublicense is granted
                    by the Company, which occurred in July 2000;

               o    Upon grant of the first  sublicense,  the Company will pay a
                    license fee of $25,000, which has been paid; and

               o    Thereafter,  the Company will have to pay an annual  royalty
                    of $250 per retail travel agency who is participating in the
                    World  Key  Agency   Group  and  to  whom  the  Company  has
                    sublicensed  the Trademark.  For the year ended December 31,
                    2000,  the  Company  has  paid   approximately   $31,000  in
                    royalties under this agreement.

          o    The Company has the option to acquire  the  Trademark  from World
               Key, Inc. on the following terms:

               o    The Company must  exercise the option within 36 months after
                    the  date of the  Trademark  License  Agreement,  that is by
                    September 30, 2002;

               o    The Company must pay World Key, Inc. a purchase  price equal
                    to the sum of:

                    o    The product  obtained  by  multiplying  $2,500,  by the
                         number of  sublicenses  that are  outstanding as of the
                         date of the exercise of the option; and

                    o    The product  obtained  by  multiplying  $2,500,  by the
                         number of  sublicenses  that are granted after the date
                         of the  exercise  of the option and prior to  September
                         30, 2004; or

                    o    The Company can pay the purchase  price either in cash,
                         or as long as the trading price of the Company's common
                         stock is at least $5.00 per share,  in shares of common
                         stock,  which  have an  aggregate  value  equal  to the
                         purchase price.

         The Company  believes that the "WORLD KEY"  trademark  has  significant
         value and will  facilitate  the Company's  establishment  of the retail
         travel agency  network.  At the same time, the Company has attempted to
         structure the Trademark  License  Agreement so that its obligations are
         manageable  and are  proportionate  to its use of the Trademark and the
         benefit the Company realizes from the agency network.

                                      F-12
<PAGE>

         Jim B. Tyner,  Chairman of the Board of Directors  and Chief  Executive
         Officer  of  the  Company,  Yula  Greco,  Vice  President,   Secretary,
         Controller  and a director of the Company and John R. Toal,  President,
         Chief  Operating  Officer  and a  director  of the  Company,  are  also
         principal  shareholders  of World Key,  Inc.  Of a total of 6.0 million
         shares  outstanding of World Key,  Inc.,  Jim B. Tyner,  Yula Greco and
         John R.  Toal are the  beneficial  owner  of 1.8  million  shares,  1.4
         million shares and 120,000 shares, respectively.  Jim B. Tyner and Yula
         Greco are also officers of World Key, Inc.

         The  Company  expects  that,  in the event it  exercises  its option to
         purchase the Trademark  from World Key,  Inc., it would offset  against
         the purchase price any outstanding  advances  ($320,303 at December 31,
         2000) made by the Company to World Key, Inc. at the time of exercise.

3.       FURNITURE AND EQUIPMENT, NET

         Furniture and equipment at December 31, 2000 consists of the following:

         Furniture and fixtures                               $ 53,129
         Office equipment                                       49,011
                                                              --------
         Total furniture and equipment                         102,140
         Less: accumulated depreciation                         22,333
                                                              --------
         Furniture and equipment, net                         $ 79,807
                                                              ========

4.       ACCOUNTS PAYABLE AND ACCRUED EXPENSES

         As of December 31, 2000,  accounts payable and accrued expenses include
         approximately $132,000 of federal and state payroll tax withholding for
         which the  Company  is  delinquent  in payment  to the  respective  tax
         authorities for the year ended December 31, 2000.  Also, as of December
         31, 2000, the Company has accrued  approximately  $104,000 of estimated
         penalties and interest relating to the delinquent tax payments.

5.       NOTES PAYABLE

         Notes payable at December 31, 2000 consists of the following:

         September 1998 Private Placement                   $   85,000
         January 1999 Private Placement                        225,000
         June 1999 Private Placement                           240,000
         Funding Agreement                                     350,000
         Bridge Loan Notes                                   1,353,500
         Travel Equities, Ltd.                                  79,450
         Purchase of Founders' Stock                           150,000
         Other                                                  20,000
         Furniture                                              40,941
                                                            ----------
         Total Notes Payable                                 2,543,891
         Less:  Current Portion                              2,511,992
                                                            ----------
         Notes Payable, Long-Term Portion                   $   31,899
                                                            ==========

                                      F-13
<PAGE>

         A description of the above notes payable is as follows:

         SEPTEMBER 1998 PRIVATE PLACEMENT - The Company issued six notes payable
         to individuals of various amounts ranging from $7,500 to $15,000 issued
         in  connection  with the  Company's  September  1998 Private  Placement
         Offering.  These notes are unsecured,  with interest accruing at 8% and
         payable  in full upon the  earlier  of: 1)  public  sale of  registered
         shares of the Company,  or 2) December 31, 2000. The face value of each
         note may be converted  into ten times the dollar  amount of the note of
         the  Company's  common  stock at the time of the  Company's  successful
         public  stock  offering.  The number of shares  that would be issued is
         based on the converted dollar amount divided by the same offering price
         in the public stock offering (see Note 10 - "Subsequent Events").

         JANUARY 1999 PRIVATE PLACEMENT - The Company issued 15 notes payable to
         individuals  with  an  individual  face  value  of  $15,000  issued  in
         connection with the Company's January 1999 Private Placement  Offering.
         These notes are unsecured,  with interest accruing at 6% and payable in
         full upon the earlier of: 1) public  sale of  registered  shares of the
         Company,  or 2) December  31,  2000.  Each note may be  converted  into
         $50,000  of the  Company's  common  stock at the time of the  Company's
         successful  public  stock  offering  at the same per share price as the
         offering  price.  The number of shares that would be issued is based on
         the converted  dollar amount  divided by the same offering price in the
         public stock offering (see Note 10 - "Subsequent Events").

         JUNE 1999 PRIVATE PLACEMENT - The Company initiated the sale of a third
         series of private  placement  convertible  notes.  Each note has a face
         value of $15,000  and a coupon  rate of 6%.  Each  $15,000  note may be
         converted,  at the note holder's option,  at any time prior to maturity
         (December 31, 2000) into $50,000 of the  Company's  common stock at the
         time of the Company's  successful public stock offering at the same per
         share price as the offering price. A total of 16 notes were sold during
         the offering,  which  expired July 31, 1999.  Half of one note has been
         sold to an  officer of the  Company in lieu of $7,500 of the  officer's
         salary.  The  number  of  shares  that  would be issued is based on the
         converted  dollar  amount  divided  by the same  offering  price in the
         public stock offering (see Note 10 - "Subsequent Events").

         FUNDING  AGREEMENT  - In December  1999,  the  Company  entered  into a
         Funding  Agreement.  The  Agreement  provides  for  up to  $350,000  in
         advances  in  multiples  of $50,000  with a  borrowing  rate of 8%. All
         advances on the loan were payable on May 30,  2000.  As of December 31,
         2000,  the entire  amount was  advanced.  The loan carries a unilateral
         option by the note holder to convert all outstanding  amounts to common
         stock at $2.00 per share (see Note 10 - "Subsequent Events").

         BRIDGE  LOAN NOTES - During the  period  from  September  1999  through
         December 2000,  the Company issued a series of  Bridge Loan Notes.  The
         notes  have various face values  ranging from $12,500 to $125,000 and a
         coupon  rate of 8%. Each note carries a stock dividend wherein the note
         holder will be  issued  between 3,500 and 10,000 shares of common stock
         for each  $25,000 of  note value.  The notes mature on either of: a) 90
         days from the date of issuance, or  b) 30 days from the closing date of
         the Company's successful initial public offering.

                                      F-14
<PAGE>

         LOAN PAYABLE - Travel Equities Ltd. - Advances were made to the Company
         under a loan agreement  dated July 15, 2000. The advances have a coupon
         rate of 10%  and  are  repayable  no  later  than  November  15,  2001.
         Additional  consideration  of the  loan is a  one-time-issuance  of one
         warrant for each $10.00  advanced  to the  Company,  up to a maximum of
         50,000 warrants to purchase one share of the Company's  common stock at
         a price of $10.50 per share.  As of December 31,  2000,  the Company is
         required to issue  warrants to purchase  7,945 shares of the  Company's
         common  stock  related  to this note.  The  Company  has  valued  these
         warrants at $5,000 using the  Black-Scholes  option  pricing model with
         the following  assumptions:  no dividends;  expected life of two years;
         expected volatility of 39% and a risk-free rate-of-return of 5.5%.

         LOAN  PAYABLE - Sale of Common  Stock by  Founders - A director  of the
         Company  entered  into an agreement  to purchase  50,000  shares of the
         Company's  common stock  directly  from the founding  shareholders  for
         $3.00  per  share.  Under  a  separate  loan  agreement,  the  founding
         shareholders lent the funds,  $150,000,  to the Company. The loan has a
         6% coupon rate and the principal  amount and accrued  interest  thereon
         are due on December 31, 2001. Since, the founding  shareholders entered
         into  the  transaction  at a share  price  below  market  and the  sale
         benefited  the  Company,  the Company has  recorded a financing  fee of
         $150,000,  which was  determined by the difference in the sale price of
         the  shares and the fair  market  value of the  shares,  limited to the
         gross  proceeds of $150,000.  The financing fee has been recorded as an
         increase in shareholders' deficit and a corresponding interest expense.

         LOANS PAYABLE - Other - Advances to the Company with no repayment terms
         or interest due. The loans were  converted to a Bridge Loan Note in the
         first quarter of 2001.  Note Payable - Furniture - Note dated  December
         31,  1999  for the  purchase  of the  Company's  office  furniture  and
         fixtures  from an  unrelated  third party due on or before  December 1,
         2004. The note has a coupon rate of 8%.

6.       RELATED PARTY TRANSACTIONS

         For the period  August 18, 1998 (date of  inception)  to  December  31,
         1999, the Company accrued a management fee of $84,500 payable on demand
         to World Key,  Inc., a related  party (see Note 2) for common  overhead
         expenses such as rent,  utilities  and payroll.  Rent and utilities are
         allocated based upon square foot  utilization.  No management fees were
         accrued in the year ended December 31, 2000 since the Company no longer
         utilized World Key, Inc. facilities.

         Payroll  expense for certain  officers  during the years ended December
         31,  2000 and 1999 was paid by World  Key,  Inc.,  and  charged  to the
         Company for  reimbursement.  Management  believes  that the  allocation
         method is appropriate based on time and resources used.


                                      F-15
<PAGE>

         During 2000 and 1999,  officers  and  shareholders  of the Company made
         unsecured working capital loans to the Company.  The loans ($349,650 at
         December 31, 2000) are payable upon demand.  One loan for $25,000 has a
         coupon rate of 10% and two loans,  one for $50,000 and one for $60,000,
         each  have a  coupon  rate of 8%.  All  other  loans  are  non-interest
         bearing.

         In 1999, the Company  accrued  $50,000 in fees to Donald G. Scanlin and
         Stevan M. Saylor, both significant shareholders of the Company ($25,000
         each), for marketing advisory  services.  The balance remains unpaid as
         of December 31, 2000.

         Jim B. Tyner,  Chairman and  Chief Executive Officer of the Company, is
         also  Chairman and  President of  World Key,  Inc. Mr. Tyner owns 33.9%
         and 30%, respectively,  of  the outstanding common stock of the Company
         and World Key, Inc.

         John R. Toal,  President  and Chief  Operating  Officer of the Company,
         owns 8.6% and 2.0%,  respectively,  of the outstanding  common stock of
         the Company and World Key, Inc.

         Yula Greco, Vice President, Secretary and Controller of the Company, is
         also  Vice  President  and  Secretary of World Key, Inc. Ms. Greco owns
         8.6% and  23.3%,  respectively, of  the outstanding common stock of the
         Company and World Key, Inc.

7.       EQUITY

         Convertible Preferred Stock
         ---------------------------
         In August 1999,  the Company  created  a new class of  preferred  stock
         entitled  "Series  A  Preferred".  The  Company  may  issue up to 8,154
         shares of this new class.  This class has a $20 per  share  liquidation
         preference,   receives   dividends   at  the   same   rate  as   common
         shareholders,  has preferential  voting  rights on certain  shareholder
         issues and  may be  converted  into three shares of common stock at the
         preferred shareholders' option.

         Common Stock
         ------------
         On June 30, 2000 the Company was declared  effective by the  Securities
         and  Exchange  Commission  to  proceed  with a Direct  Public  Offering
         ("DPO").  On  October  11,  2000  the  Company  filed a  post-effective
         amendment  to its  SB-2  Registration  Statement  to  offer  for sale a
         minimum of 461,539  shares  and a maximum  of  1,500,000  shares of its
         common stock at a price per share of $6.50.  The  anticipated  offering
         proceeds to the Company from the DPO, before deducting  expenses of the
         offering,  was a minimum of $3 million and a maximum of $9.75  million.
         The  Company  has not  completed  its DPO and has not  sold  any of the
         securities  covered by the DPO. Further,  the Company has abandoned all
         efforts to complete its DPO.

                                      F-16
<PAGE>

         In October  2000 the Company  delivered to its market maker for further
         delivery  to a certain  investor  upon the  investor's  payment  of the
         consideration  required  in the DPO,  462,000  shares of the  Company's
         common stock in accordance with the SB-2 Registration Statement.  After
         issuance of such shares to the market  maker,  the investor  reneged on
         the payment of the purchase of the shares. As of December 31, 2000, the
         shares  have  neither  been  returned  to the  Company  nor  cancelled.
         However,  no subsequent  sale has been completed and the Company is now
         in the process of requesting that the shares be returned.

         The Company has not included the foregoing 462,000 shares in its number
         of issued and  outstanding  shares of common stock in the  accompanying
         financial   statements,   since  the  sale  of  such   shares  was  not
         consummated.

         Stock Split
         -----------
         On August 25, 1999, the Company  declared a 2 for 1 stock split for all
         common  shareholders  of record at that  date.  The effect of the stock
         split has been reflected retroactively in the financial statements.

         Incentive Stock Plan
         --------------------
         In April 1999, the Board of Directors  approved an Incentive Stock Plan
         (the "Plan")  under which stock  incentives to purchase up to 1,000,000
         shares of the  Company's  common  stock may be  granted  to  employees,
         directors and consultants at not less than the fair market value on the
         date of grant.  Stock  options  granted  under  the Plan are  generally
         exercisable  five to ten  years  after  the  date of grant  and  expire
         December 31, 2009.  Stock options are granted at the  discretion of the
         Board of Directors or Committee.  No options have been issued since the
         Plan's inception.

         On January 15, 1999,  the Company  initiated  an Internet  Stock Option
         Sweepstakes.  The  winner of the  sweepstakes  was given the  option to
         purchase up to $1,000,000 of Company stock at the public issuing price.
         Since the Company has not made a public  offering prior to December 31,
         2000,  the option has been redeemed for $25,000,  which amount has been
         recorded as an accrued expense of the Company.

8.       CONTINGENT LIABILITIES

         Through  March 2000,  the Company did not carry  general  liability  or
         workers' compensation  coverage,  nor was it self-insured.  The Company
         accrues  liabilities  when it is  probable  that  future  costs will be
         incurred and such costs can be reasonably estimated. In April 2000, the
         Company  did  obtain  general   liability  and  workers'   compensation
         coverage.  As of December 31, 2000 there were no known liability claims
         related to the period when the Company did not carry insurance.


                                      F-17
<PAGE>

9.       LEASE COMMITMENTS

         The Company  entered  into a lease  agreement  for its office  facility
         beginning  January 1, 2000. The agreement expires on December 31, 2004.
         For the years ended December 31, 2000 and 1999 rent expense amounted to
         $64,764 and $17,572, respectively. Minimum lease payments due under the
         non-cancelable operating lease are as follows:

         For the Year Ending December 31:
         2001                                                 $   64,260
         2002                                                     64,260
         2003                                                     64,260
         2004                                                     64,260
                                                               ---------
         Total                                                 $ 257,040
                                                               =========

10.     SUBSEQUENT EVENTS

        During   the  first   quarter   of  2001,  the   holders  of  35 of  the
        convertible  notes  issued in  private  placements  in  September  1998,
        January 1999 and June 1999,  in the aggregate  amount of $490,000,  have
        converted  their  notes into an  aggregate  of 346,146  shares of common
        stock. After giving effect to the foregoing conversions,  there remained
        outstanding two notes in the aggregate  principal  amount of $60,000 and
        with  respect to which the Company has  reserved for issuance a total of
        30,769 shares of its common stock.

        Also during the first quarter of 2001, the holder of a note issued under
        a Funding  Agreement  that  commenced in December 1999 has converted the
        aggregate amount of $250,000 of the total Funding Agreement into 125,000
        shares of the Company's common stock and an additional  15,000 shares of
        the Company's common stock was issued for the interest due thereon,  for
        a total of 140,000 shares issued under the Funding Agreement  conversion
        rights. After giving effect to the foregoing conversion,  there remained
        outstanding the principal balance of $100,000, for which the Company has
        reserved for issuance 50,000 shares of its common stock.



                                      F-18
<PAGE>

                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf by the undersigned,  thereunto duly authorized, on this 26th day of April
2001.

                                 TRAVELNSTORE, INC.

                              By: /s/ Jim B. Tyner
                                 ----------------------------------
                                 Jim B. Tyner,  Chairman of the Board,
                                 Chief Executive Officer and Director

         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.

 NAME                      TITLE                                 DATE
 ----                      -----                                 ----

 /s/ Jim B. Tyner          Chairman of the Board, Chief          April 26, 2001
 ----------------          Executive Officer and Director
 Jim B. Tyner              (Principal Executive Officer)


 /s/ John R. Toal          President, Chief Operating Officer    April 26, 2001
 ----------------          and Director
 John R. Toal


 /s/ Yula Greco            Vice President, Secretary,
 ----------------          Controller and Director               April 26, 2001
 Yula Greco


 /s/ Glenn E. Glasshagel   Senior Vice President and Chief       April 26, 2001
 -----------------------   Financial Officer
 Glenn E. Glasshagel       (Principal Financial Officer and
                           Principal Accounting Officer)


 /s/Richard A. Bush        Director                              April 26, 2001
 ---------------------
 Richard A. Bush


 /s/ James M. Kingzett     Director                              April 26, 2001
 ---------------------
   James M. Kingzett


 /s/ William E. Schenck    Director                              April 26, 2001
 ----------------------
    William E. Schenck

                                       34