U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  FORM 10-KSB

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

                    For Fiscal Year Ended: December 31, 2000

                                       OR

       |_|     TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
               SECURITIES EXCHANGE ACT OF 1934

               For the transition period from _______________ to _______________


               Commission file number                         000-30158
                                     -------------------------------------------

                             Harmony Trading Corp.
                    ---------------------------------------
                    (Exact name of small business issuer as
                           specified in its charter)

                New York                                     13-3935933
    --------------------------------                     ------------------
      (State or other jurisdiction                          (IRS Employer
    of incorporation or organization)                    Identification No.)

 275 St. Jacques St. West, Suite 36, Montreal, Quebec, Canada         H2Y 1M9
--------------------------------------------------------------------------------
    (Address of principal executive offices)                       (Zip Code)

Issuer's telephone number            (514) 286-0909
                          ---------------------------------------

Securities registered under Section 12(b) of the Act:         None
                                                     ---------------------------

Securities registered under Section 12(g) of the Act: Common Stock, par value
                                                      $0.000333 per share
                                                      --------------------------

<PAGE>

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

      Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will 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. |_|

      State registrant's revenues for its most recent fiscal year: $17,438.

      As of March 15, 2001, there were 9,330,000 shares of the registrant's
common stock, par value $0.001 issued and outstanding. Of these, 4,125,000
shares are held by non-affiliates of the registrant. The market value of
securities held by non-affiliates is $3,867,188 based on the average closing bid
and asked bid price of $0.9375 of the registrant's common stock on March 28,
2001.

Transitional Small Business Disclosure Format (check one):
Yes |_|; No |X|

                      DOCUMENTS INCORPORATED BY REFERENCE

      If the following documents are incorporated by reference, briefly describe
them and identify the part of the Form 10-KSB (e.g., Part I, Part II, etc.) into
which the document is incorporated: (1) any annual report to security holders;
(2) any proxy or information statement; and (3) any prospectus filed pursuant to
Rule 424(b) or (c) of the Securities Act of 1933, as amended ("Securities Act")
-- N/A.

<PAGE>

--------------------------------------------------------------------------------
                               TABLE OF CONTENTS
--------------------------------------------------------------------------------

   Item Number and Caption                                                  Page

         Forward-Looking Statements............................................4

   PART I

      1.  Description of Business..............................................4

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

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

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

   PART II

      5.  Market for Common Equity and Related Stockholder Matters.............9

      6.  Management's Discussion and Analysis of Financial Condition
          and Results of Operations...........................................10
      7.  Financial Statements................................................14

      8.  Changes in and Disagreements with Accountants on Accounting
          and Financial Disclosure............................................14

   PART III

      9.   Directors, Executive Officers, Promoters and Control Persons;
           Compliance with Section 16(a) of the Exchange Act..................15

      10.  Executive Compensation.............................................17

      11.  Security Ownership of Certain Beneficial Owners and Management.....17

      12.  Certain Relationships and Related Transactions.....................18

      13.  Exhibits and Reports on Form 8-K...................................19

<PAGE>

--------------------------------------------------------------------------------
                           FORWARD-LOOKING STATEMENTS
--------------------------------------------------------------------------------

      Except for historical information, this report contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Such forward-looking
statements involve risks and uncertainties, including, among other things,
statements regarding our business strategy, future revenues and anticipated
costs and expenses. Such forward-looking statements include, among others, those
statements including the words "expects," "anticipates," "intends," "believes"
and similar language. Our actual results may differ significantly from those
projected in the forward-looking statements. Factors that might cause or
contribute to such differences include, but are not limited to, those discussed
in the section "Management's Discussion and Analysis of Financial Condition and
Results of Operations". You should carefully review the risks described in other
documents we file from time to time with the Securities and Exchange Commission.
You are cautioned not to place undue reliance on the forward-looking statements,
which speak only as of the date of this report. We undertake no obligation to
publicly release any revisions to the forward-looking statements or reflect
events or circumstances after the date of this document.

--------------------------------------------------------------------------------
                                     PART I

                        ITEM 1. DESCRIPTION OF BUSINESS
--------------------------------------------------------------------------------

      Harmony Trading Corp., a New York corporation, was formed on August 13,
1996. We remained inactive until December 1998, when we became a direct seller
for Doncaster, a division of Tanner Companies. Doncaster is a manufacturer of
women's apparel and accessories.

      Our business is the direct selling of Doncaster women's apparel and
accessories. Doncaster is a division of Tanner Companies Limited Partnership, a
private company, which is based in Rutherfordton, North Carolina. Direct selling
is the sale of a consumer product or service in a face-to-face manner away from
a fixed retail location. We, through our two independent contractors, Falene
Gottbetter and Roberta Winley, market the Doncaster line through fashion shows
and private appointments. Initially, Mrs. Gottbetter entered into a fashion
consultant agreement with Tanner. Tanner and Mrs. Gottbetter verbally agreed to
allow us to assume the fashion consultant agreement from Mrs. Gottbetter.

      Under the agreement with Tanner, we receive a sales kit four times a year,
one for each seasonal collection. We pay $180 to Doncaster for each sales kit,
but that money will be refunded if we decide not to continue selling Doncaster.
The sales kit includes brochures for the trunk show mailings, a look book which
contains a detailed description of every item, fabric and color swatches,
pictures of every item in the collection, a size chart and a pricing sheet. The
agreement is on-going and can be terminated either by us or by Tanner on thirty
(30) days written notice. The agreement provides that we will not show
competitive products at the same time that we are


                                       4
<PAGE>

showing Doncaster apparel. We must sell, after returns and credits, a minimum of
$10,000 per collection in order to remain a fashion consultant for Doncaster.

      We are in the District 39 selling district. Although we are geographically
based in Westchester County, New York, we are not limited to selling to
customers only located in Westchester, and we sell to anyone wherever located.
We are not the only Doncaster fashion consultant in District 39. District 39
consists of the counties of Orange, Rockland, Nassau, Westchester and New York.
There are approximately 28 other fashion consultants in District 39. The
district managers set sales goals for the fashion consultants based on the
previous collection's sales. These goals are only guidelines, and the fashion
consultants are not penalized if the goals are not met.

      Each Doncaster sales district has a district manager. The district manager
is responsible for coordinating the scheduling of all the trunk shows in the
district, the receipt of the trunk show clothing collection and keeping the
fashion consultants in communication so the truck show collection is delivered
to every fashion consultant on time. The district manager works with the fashion
consultants when they are having problems with Doncaster in having orders
delivered, having returns credited and having back orders filled.

      Doncaster also has regional managers. The regions consist of several
states. The regional managers have similar responsibilities to the district
manager but on a larger scale.

      Doncaster has district training services once a month for all fashion
consultants in each sales district. The seminars are held at Doncaster's
showroom in New York, New York. The cost of attending these seminars is $50 per
person, which is for the cost of the luncheon and refreshments. At the district
training seminars, Doncaster fashion consultants meet with the district sales
manager to discuss customer complaints, selling techniques and Doncaster
merchandise. The seminars last for half a day and attendance is strongly
recommended, though not mandatory.

      Doncaster also holds regional meetings for its fashion consultants four
times per year, which include districts from several states. These regional
meetings are all day affairs, at a cost of approximately $85 per person, which
is for the cost of the luncheon and refreshments. At the regional meetings,
Doncaster presents a fashion show of its new collection, has a question and
answer session for its fashion consultants, and presents awards to its top
sellers. Both Mrs. Gottbetter and Ms. Winley have received awards for their
selling efforts. Doncaster holds one annual meeting for its fashion consultants.

      There are four trunk shows every year, one for each collection. We have
our trunk shows in the home of Paul and Falene Gottbetter. Each trunk show lasts
for one week. For the second to fourth week prior to a trunk show, Mrs.
Gottbetter devotes approximately 16 hours per week preparing for the show. Ms.
Winley devotes approximately 50 hours per week for the same period. During this
three-week period, Mrs. Gottbetter and Ms. Winley create a mailing on the show
and send the mailing to the customers on our client list. They also begin making
appointments to show clients the collection during the show.


                                       5
<PAGE>

      The week prior to the show Mrs. Gottbetter devotes approximately 24 hours
to our business and Ms. Winley devotes approximately 4 hours. During this time,
they prepare the Gottbetter's home for the show and schedule appointments.
During the week of the trunk show and the week after the trunk show, both Mrs.
Gottbetter and Ms. Winley devote approximately 40 hours each per week to our
business, showing clients the collection and taking orders. The week after the
trunk show is spent following up with Doncaster on the orders. During the rest
of the year, Mrs. Gottbetter spends approximately 10 hours a week on our
business and Ms. Winley spends about 25 hours a week.

      In management's opinion, and Mrs. Gottbetter's and Ms. Winley's opinions,
Doncaster's clothing is comparable in quality and styling to DKNY, Donna Karan,
Dana Buchman and other high end contemporary clothing lines. The style of
clothing is classic and traditional, but modern and contemporary and is made
from wool, linen, silk and cotton. The size of the clothing ranges from 2 to 18
and 2 to 14 petite, and women's sizes 14 to 24 and is a fuller cut to assure
true sizing and proper fit. Doncaster added a new line of women's sizes to its
Spring collection called Elana.

      Our success depends in substantial part upon Doncaster's ability to
anticipate and respond to changing consumer preferences and fashion trends in a
timely manner. Although Doncaster attempts to stay abreast of emerging lifestyle
and consumer preferences affecting its merchandise, any failure by Doncaster to
identify and respond to such trends could have a material adverse effect on our
business.

      Doncaster's line of clothing consists of separate pieces to allow women
versatility in mixing matching items. The line includes pants, blazers,
sweaters, blouses, skirts, shorts, camisoles, and dresses. In addition,
Doncaster offers accessories including jewelry, belts and scarves. Doncaster has
four seasonal collections, Spring, Spring/Summer, Fall and Fall/Winter. The
collections are introduced on the following schedule - Fall in July, Fall/Winter
in September, Spring in January, and Spring/Summer in May. Within each season's
collection, there are various style/theme collections. For example, the Spring
/Summer 1999 collection consisted of Sloan Ranger, White Sand, Summer
essentials, Kauai Island and Spice Market Group. The Sloan Ranger group was
inspired by London's Sloane Ranger district and featured casual coordinates in
khaki, white, peach and lilac, in solids and prints. The White Sand group
consisted of very classic pieces including, but not limited to, a shirtwaist
dress, and a man tailored jacket, man tailored shirt, in the colors of white,
beige and navy. The Fall 1999 collection consists of the following: Grey
Matters, Country Classics, Luxe, Fall Essentials, Haute View and Simply Silk. In
addition to slacks, sweaters, blouses, the Fall collection included wool jackets
and a coat with a detachable fur collar.

      Doncaster has been in business since 1931, and we have been a direct
seller of Doncaster clothing and accessories since December 1998.

      We rely on our mailing list, referrals and national advertising by
Doncaster in order to increase our customer base. We currently have a mailing
list of approximately 200 names to which we send announcements of the trunk
shows and preview shows during the year.


                                       6
<PAGE>

      The trunk show lasts for one week, and it is by appointment. Customers
make appointments to view the current collection, try on different pieces and
place orders. Each client's appointment is for one hour to one and one-half
hours. The client can look at various colors and fabrics in a "look book" for
the current season's collection. If a client is unable to attend the trunk show,
we will make an appointment to view the collection at Doncaster's New York
showroom. Doncaster's offices in New York City are open during regular business
hours. However, we are able to obtain after hours access to the showroom with
advance notice to Doncaster.

      We forward a client's order to Doncaster by phone or fax. The customer is
not billed for the order until Doncaster ships the order to the client. The
order can be shipped directly to the client or to Doncaster's New York showroom.
Doncaster employs a dressmaker who can make alterations to the clothing.
Clothing which has not been altered or worn can be returned to Doncaster for a
full refund within thirty days of receipt.

      We also obtain clients from referrals by Doncaster in response to its
national advertising campaign in magazines like as Harper's Bazaar, Town &
Country Mode, and Vogue. Doncaster will give the name and telephone number of a
consultant in a potential client's area in response to calls Doncaster receives
from the public inquiring about its merchandise.

      We run fashions shows for various organizations, including but not limited
to, women's groups, church groups and other women's organizations. For each
season, Doncaster provides a fashion show set which a consultant can obtain from
Doncaster's district manager.

      The women's apparel retail industry is highly competitive and fragmented.
We compete with large specialty retailers, traditional and better department
stores, national apparel chains, designer boutiques, individual specialty
apparel stores and other direct marketing firms. We do not have to compete with
these other businesses for merchandise since we only order merchandise for
individual clients directly from Doncaster. However, Doncaster only manufactures
a fixed number of pieces of each item and the pieces are sold on a "first-come,
first-serve basis." Most of our competitors are larger, have greater financial
resources and a more varied selection of clothing than we do. Our success is
dependent in part upon initiating and maintaining strong relationships with our
clients and the quality and value of the Doncaster clothing.

      In addition to selling Doncaster, our consultants also act as fashion
consultants. As a fashion consultant we:

      o     teach people how to put different outfits together using the same
            items of clothing;

      o     act as a wardrobe consultant and assist clients in throwing away the
            old clothes that they have been saving; and

      o     assist the clients in evaluating which styles and color are the most
            suitable for them.


                                       7
<PAGE>

      We act as a fashion consultant directly in connection with our selling
Doncaster. We do not currently charge for this service because we have found
that our clients, after consulting with us, tend to purchase more items in order
to update or create a new look.

      We are contemplating becoming a direct seller for additional products that
do not compete with Doncaster. We are investigating the possibility of being a
direct seller of cosmetics and skin care products. We are currently
investigating the various cosmetic and skin care manufacturers that engage in
direct sales, although we have no arrangements with any manufacturer and we have
not identified a specific manufacturer who we may contact.

      In investigating the different manufacturers, we are interested in
products that are:

            o     of high quality;
            o     moderate cost;
            o     has supportive management;
            o     has national advertising; and
            o     has a reasonable return policy.

      As of April 1, 2000, we had no employees. We have two independent
contractors, Falene Gottbetter and Roberta Winley. Falene Gottbetter is the wife
of our former President, Paul B. Gottbetter. Mrs. Gottbetter and Ms. Winley are
independent contractors and not our employees. The decision to have them as
independent contractors are for tax purposes. By classifying Mrs. Gottbetter and
Ms. Winley as independent contractors and not employees, we are not responsible
for paying unemployment taxes, disability or social security taxes, providing
benefits like pension or medical plans, providing paid vacation or withholding
taxes. The benefit to us is that our record keeping is simpler. We pay our
consultants a commission and give them a Form 1099 for their yearly taxes.

      Our consultants are considered independent consultants because they do not
have an employment contract with us, they have no regular hours and they are
paid on a commission basis.

--------------------------------------------------------------------------------
                        ITEM 2. DESCRIPTION OF PROPERTY
--------------------------------------------------------------------------------

      We maintain our executive offices at 275 St. Jacques Street West, Suite
36, Montreal, Quebec, Canada, the executive offices of our controlling
stockholder, Group InterCapital Inc. We do not have any rental agreement with
Group InterCapital Inc. We pay a nominal rent of $250 per month to Group
InterCapital Inc.


                                       8
<PAGE>

--------------------------------------------------------------------------------
                           ITEM 3. LEGAL PROCEEDINGS
--------------------------------------------------------------------------------

      We have no notice of any pending material litigation.

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

Three-For-One Stock Split

      Our stockholders holding 1,735,000 shares (approximately 56% of the
outstanding shares of our common stock) on September 29, 2000 consented in
writing to, the amendment to our Certificate of Incorporation to effect a
three-for-one split of our common stock.

Eliminate Preemptive Rights

      Our stockholders holding 5,205,000 shares (approximately 56% of the
outstanding shares of our common stock) on December 19, 2000, consented in
writing, to the amendment to our Certificate of Incorporation to eliminate
preemptive rights.


--------------------------------------------------------------------------------
                                    PART II

                        ITEM 5. MARKET FOR COMMON EQUITY
                        AND RELATED STOCKHOLDER MATTERS
--------------------------------------------------------------------------------

Market Information

      Our common stock has been traded on the NASD Over-the-Counter Bulletin
Board under the symbol "HRMY" since July 6, 2000. The following table sets
forth, for the fiscal quarters indicated, the high and low bid prices per share
of our common stock and warrants as reported on the NASD Over-the-Counter
Bulletin Board. The quotations reflect inter dealer prices, without retail
mark-up, mark-down or commissions and may not represent actual transactions. The
prices set forth below have been adjusted to reflect the three-for-one stock
split effective December 5, 2000.

                                  Common Stock
Year Ended December 31, 2000    High        Low
Third Quarter                   1.500      0.125
Fourth Quarter                  3.031      1.542


                                       9
<PAGE>

      On March 28, 2001, the closing bid price of our common stock was $1.00.

Holders

      As of March 15, 2001, there are approximately 33 record holders of our
common stock.

Dividends

      As of the date of this report, no cash dividends have been declared on the
common stock. Subject to the prior rights of any series of preferred stock which
may from time to time be outstanding, if any, holders of common stock are
entitled to receive ratably, dividends when, as, and if declared by the board of
directors out of funds legally available therefor. Under the Business
Corporation Law of New York, we may only pay dividends out of capital and
surplus, or out of certain enumerated retained earnings, as those terms are
defined in the Business Corporation Law of New York. The payment of dividends on
its common stock is, therefore, subject to the availability of capital and
surplus or retained earnings as provided in the Business Corporation Law of New
York.

Recent sales of securities

      None.


--------------------------------------------------------------------------------
                  ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
--------------------------------------------------------------------------------

      The following discussion and analysis should be read in conjunction with
the financial statements and notes thereto appearing elsewhere in this document.
In addition to the information contained herein the following discussion
contains forward looking statements that involve certain risks and uncertainties
which may cause our actual results in future periods to differ materially from
forecasted results. See "Forward Looking Statements" on page 4.

      We were formed on August 13, 1996, under the laws of the State of New
York. We intend to continue to be a direct seller of Doncaster apparel. The
following is our plan of operation for the next twelve months. Although we were
formed in August 1996, we were unable to locate a business to engage in until
Summer 1998, when we discovered the business of direct selling Doncaster
apparel. From Summer 1998 to December 1998, we engaged in compiling a mailing
list to announce the December 1998 holiday line. We commenced operations as a
direct seller of Doncaster in December 1998. Our operations to date have
consisted of preparing for the direct selling of Doncaster by compiling a
mailing list, sending out mailings and the selling of Doncaster through trunk
shows and personal appointments.


                                       10
<PAGE>

      We are in the developmental stage and our revenues are based solely on the
commission we receive from the sales of Doncaster apparel. We have also received
money from a limited offering of shares of our common stock in April 1999, which
raised $25,250.

      After deducting operating expenses which consist of postage, printing and
miscellaneous office supplies of approximately $1,000 per trunk show, the two
consultants are paid their fees. Since we do not have to pay in advance for any
of the merchandise that we sell, it is not necessary to have large amounts of
cash available.

      Doncaster pays us a commission of 25% of the net sales Doncaster receives
from our selling efforts. The commission that Doncaster pays to us is our total
revenue from the sales of the Doncaster apparel. The net sales are the total of
all the sales to the customers minus any returns. Of the money we receive from
Doncaster, Ms. Winley is paid 40% as a commission, from which her share of
expenses is deducted. After certain minimal expenses are charged back to Ms.
Winley, the rest of commission remains with us and is recognized as income.

      The proceeds from the limited offering have been used to pay for our legal
and accounting fees in connection with the preparation and filing of our
registration statements on Form 10-SB which was filed with the Securities and
Exchange Commission on July 22, 1999, the preparation and filing of our
registration statement for certain selling shareholders on Form SB-2 which was
filed with the Securities and Exchange Commission on December 21, 1999, the
preparation and filing of our annual report, and the preparation and filing of
our quarterly reports and the year audit for the year ended December 31, 2000.

      Doncaster increased its current line of apparel by adding women's sizes
(16W, 18W, 20W, 1X, 2X, etc.), in the Spring 2000 collection. We expect that
with the additional sizes available, our customer base will increase and our
revenues will increase due to the additional sales. We realize adequate revenue
after the payment of the commissions to our independent contractors, to cover
our out-of-pocket costs, and our legal and accounting expenses. In the next
twelve months we intend to:

      o     continue selling Doncaster apparel;

      o     increase our client base through mailings and word-of-mouth; and

      o     become a direct seller of a cosmetic skin care product line or
            another product line that compliments but does not compete with
            Doncaster.

      We do not expect to hire any employees or engage the services of any
additional independent contractors in the next twelve months unless the number
of customers increases to an extent that an additional fashion consultant is
needed. Any additional consultants would be paid a percentage of our
commissions.

      Although we would like to generate profits, at this stage, it is unlikely
we will be able to do so, unless our net sales increase. In order to do this,
our sales at Doncaster must increase or we must sell other products in addition
to Doncaster.


                                       11
<PAGE>

      Our business for the next twelve months does not include any product
research and development other than investigating the manufacturers of cosmetics
and skin care products that market their merchandise through direct selling. In
order to investigate these manufacturers, we will:

      o     contact the Direct Selling Association for the names and addresses
            of cosmetic manufacturers;

      o     research magazines and newspapers for advertisements placed by
            cosmetic manufacturers; and

      o     use the Internet as a search and research tool on cosmetic
            manufacturers.

      Once we identify a cosmetic manufacturer that we are interested in, Mrs.
Gottbetter will contact the manufacturer to discuss the possibility of Harmony
becoming a direct seller of the products. We anticipate that it may take up to
nine months for us to find a company whose product interests us.

      We do not expect to purchase any plant or significant equipment in the
next twelve months and we do not own any plant or significant equipment to sell.

      We anticipate that we will continue to operate at a loss for the
foreseeable future. Our expenses consist of general and administrative expenses,
legal fees and accounting fees.

      We expect that will we be able to satisfy our current cash requirements
for the next twelve months from our revenues, and we do not expect that we will
need to raise additional capital from outside sources. If we do become the
direct seller for a cosmetic and skin care manufacturer, we will be able to use
our existing customer list, and expect our startup costs to be minimal. We do
not expect to incur any extraordinary expenses like office equipment because we
have a new computer which we previously purchased.

      Since December 1998, our management had devoted the majority of its
efforts to obtaining new customers for our products, pursuing and finding a
management team to continue the process of completing its marketing goals,
marketing limited quantities of the Doncaster Line, and obtaining sufficient
working capital through loans and equity through a private placement offering.
These activities were funded by our management and investments from
stockholders.

      On August 28, 2000, Group InterCapital, Inc., a venture capital firm,
purchased from Paul Gottbetter for $100,000, 1,735,000 shares of common stock,
which represents approximately 55.8% of our outstanding common stock, thereby
acquiring control of us. Group InterCapital replaced our board of directors by
appointing Henry J. Yersh and Denis St. Hilaire. Mr. Yersh was also appointed as
our President and Chief Executive Officer and Mr. St. Hilaire was appointed as
our Chief Financial Officer.

Results of Operations


                                       12
<PAGE>

      Results of Operations for the year ended December 31, 2000 as compared to
the year ended December 31, 1999.

      For the year ended December 31, 2000, we generated net sales of $17,438 as
compared to $15,918 for the year ended December 31, 1999 representing an
increase of $1,520. Our cost of goods sold for the year ended December 31, 2000
was $-0- as compared to $-0- for the year ended December 31, 1999. Our gross
profit on sales was $17,438 for the year ended December 31, 2000 as compared to
$15,918 for the year ended December 31, 1999. The increase in gross profit is
the result of increased commission income of the Doncaster Line in the
reorganization of our business.

      Our general and administrative costs aggregated approximately $26,419 for
the year ended December 31, 2000 as compared to $41,798 for the year ended
December 31, 1999 representing an decrease of $15,379. Included in the $26,419
are $11,950 in commissions, $3,000 in accrued rent, $6,000 in accrued salary,
and $5,469 in office expenses.

      Results of Operations for the period of inception, August 13, 1996 through
December 31, 2000

      For the period from our inception, August 13, 1996, through December 31,
2000, a period of approximately 49 months, we generated net sales of $35,356 (an
average of $717 per month). Our cost of goods sold on sales was approximately $0
for the period from our inception, August 13, 1996, through December 31, 2000.
The gross profit from sales for this 52 month period is $35,356. Management
believes the gross profit of an average of $717 for the period from inception,
August 3, 1996, through December 31, 2000, will improve and stabilize once our
marketing plans become fully implemented.

      Our general and administrative costs aggregated approximately $93,867 for
the period from inception, August 13, 1996, through December 31, 2000. Of these
initial startup costs, approximately $36,950 is attributed to telephone and
other office expenses, $15,042 in commissions, $33,000 in salary and $8,875 in
rent.

      Liquidity and Capital Resources

      We increased liquidity by $4,025 from a cash balance at our inception of
$0 through the process of generating gross profits from sales, selling the
marketable securities, loans by our principal shareholders and the completion of
a private placement with net proceeds to us aggregating $18,565.

      We gained an aggregate of $843 for operating activities. In April 1999, we
sold under Rule 504 of Regulation D of the Securities Act of 1933, as amended,
an aggregate of 3,030,000 shares of common stock for an aggregate cash
consideration of $25,250 and the sale of 50,000 shares of common stock in
consideration for $2,500 in legal services less $6,685 in offering expenses.


                                       13
<PAGE>

Income Tax

      As of December 31, 2000, we had a tax loss carry-forward of $56,239. Our
ability to utilize the tax credit carry-forwards in future years will be subject
to an annual limitation pursuant to the "Change in Ownership Rules" under
Section 382 of the Internal Revenue Code of 1986, as amended. However, any
annual limitations are not expected to have a material adverse effect on our
ability to utilize our tax credit carry-forwards.

      We expect our capital requirements to increase over the next several years
as we continue to develop our business, increase sales and administration
infrastructure and embark on developing in-house business capabilities and
facilities. Our future liquidity and capital funding requirements will depend on
numerous factors, including the extent to which our present management can fund
the continued capital requirements, the costs and timing of expansion of sales,
marketing activities, facilities expansion needs, and competition in the
business entered into.

      The report of our independent accountants on our December 31, 2000
financial statements contains an explanatory paragraph regarding our ability to
continue as an ongoing business.

--------------------------------------------------------------------------------
                          ITEM 7. FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

         The financial statements and supplementary data are included beginning
immediately following the signature page to this report. See Item 13 for a list
of the financial statements and financial statement schedules included.


--------------------------------------------------------------------------------
             ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
                     ON ACCOUNTING AND FINANCIAL DISCLOSURE
--------------------------------------------------------------------------------

         None.


                                       14
<PAGE>

--------------------------------------------------------------------------------
                                    PART III

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


Executive Officers, Directors and Key Employees

      The following table sets forth certain information regarding our executive
officers, directors and key employees.


Name                  Age    Position
----                  ---    --------

Henry J. Yersh        63     President & Chief Executive Officer and Director

Denis St. Hilaire     60     Chief Financial Officer and Director

Management

      The directors have been elected by the present shareholders and will serve
for a term of one year or until their successors are elected. Officers are
appointed by, and serve at the pleasure of, the board of directors.

      Our directors and executive officers are:

      Henry Yersh, President and Chief Executive Officer and a Director, is
President and Chief Executive Officer of Gicco Investment Corp. a small venture
capital investment firm investing primarily in biotechnology and high tech
start-up companies since 1981. From 1981 to 1997, he was President of General
Interior Cleaning Corp., a janitorial contracting company specializing in
cleaning services. From 1964 to 1975, he was President of Nationwide Interior
Cleaning Co. Ltd., a janitorial contracting company specializing in cleaning
services. From 1967 to 1975, he was President of Nimco Ltd. 1967-1975 a
subsidiary of Nationwide, solely responsible for the janitorial and maintenance
operations of Man and His World, formerly known as EXPO 67.

      Denis St-Hillaire, Chief Financial Officer and a Director, has been a
self-employed businessman since 1987. Mr. Hillaire has performed various
administrative functions for several Canadian public companies. He was
instrumental in structuring the financial sector of the companies and assisting
the search for new equity capital. From 1962 to 1987, he was District Manager of
Dun & Bradstreet, a worldwide provider of business information, where he was
responsible for overseeing and maintaining all house accounts and all new
accounts of major Canadian corporations.


                                       15
<PAGE>

Consultants

      In addition to the officers and directors identified above, we expect that
Falene Gottbetter and Roberta Winley, both consultants, will be important to our
operations.

      Falene R. Gottbetter, independent contractor, age 56, has been an
independent contractor for us, and has been selling the Doncaster Line since
December 1998. During the period between June 1994 and December 1998, Mrs.
Gottbetter was retired. Mrs. Gottbetter received her B.S. in education in 1964
from Finch College and her MA in education in 1982 from Long Island University.

      Roberta Winley, independent contractor, age 56, has been an independent
contractor for us, and has been selling the Doncaster Line since December 1998.
Since January 1998, Ms. Winley has been the principle of RSW Image, Inc., her
own company, that provides fashion and image consulting services. From 1994 to
1996, Ms. Winley was employed as a sales manager of the dress division of Nancy
Crystal, a private label blouse and dress manufacture and from 1996 to 1998, Ms.
Winley was employed as a sales manager by Nira Nira, a private label
manufacturer of women's clothing that is primarily sold to catalog companies.
Ms. Winley regularly presents workshops, seminars and gives speeches on how
clothing affects people and the manner in which they are perceived by others.
Ms. Winley is a graduate of the Fashion Institute of Technology.

Board Meetings and Committees

      The Directors and Officers will not receive remuneration from us until a
subsequent offering has been successfully completed, or cash flow from operating
permits, all in the discretion of the Board of Directors. Directors may be paid
their expenses, if any, for attendance at such meeting of the Board of
Directors, and may be paid a fixed sum for attendance at each meeting of the
Board of Directors or a stated salary as Director. No such payment shall
preclude any Director from serving in any other capacity and receiving
compensation therefrom. No compensation has been paid to the Directors. The
Board of Directors may designate from among its members an executive committee
and one or more other committees. No such committees have been appointed.

      Meetings may be held from time to time to consider matters for which
approval of our Board of Directors is desirable or is required by law. Our Board
of Directors did not meet during 2000 and did acted by written consent on
several matters.

16(a) Beneficial Ownership Reporting Compliance

      To our knowledge, no officers, directors, beneficial owners of more than
ten percent of any class of our equity securities registered pursuant to Section
12 of the Exchange Act or any other person subject to Section 16 of the Exchange
Act with respect to us, failed to file on a timely basis reports required by
Section 16(a) of the Exchange Act during the most recent fiscal year, which
ended December 31, 2000.


                                       16
<PAGE>

--------------------------------------------------------------------------------
                        ITEM 10. EXECUTIVE COMPENSATION
--------------------------------------------------------------------------------

      The following table shows compensation earned during the fiscal years
ended December 31, 2000, 1999 and 1998 by our President. None of our executive
officers made $100,000 or more during any of these years. Mr. Gottbetter was our
President and Chief Executive Officer through August 28, 2000. Mr. Yersh has
been our President since August 28, 2000.

                           Summary Compensation Table

            Name & Principal Position            Year            Salary ($)

   Henry J. Yersh, President & CEO               2000             2,000

   Paul B. Gottbetter, President & CEO           2000             4,000
                                                 1999             6,000
                                                 1998             6,000

--------------------------------------------------------------------------------
    ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------------------------


      The following table sets forth information regarding the beneficial
ownership of our common stock as of March 15, 2001. The information in this
table provides the ownership information for:

      o     each person known by us to be the beneficial owner of more than 5%
            of our common stock,

      o     each of our directors,

      o     each of our executive officers, and

      o     our executive officers, directors and director nominees as a group.

      Beneficial ownership has been determined in accordance with the rules and
regulations of the SEC and includes voting or investment power with respect to
the shares. Unless otherwise indicated, the persons named in the table below
have sole voting and investment power with respect to the number of shares
indicated as beneficially owned by them.


                                       17
<PAGE>

                                                Amount of             Percentage
  Name and Address of Owner                Beneficial Ownership         Owned*
  -------------------------                --------------------         ------

Group InterCapital, Inc.                     5,205,000 shares             56%
275 St. Jacques Street West, Suite 36
Montreal, Quebec
Canada H2Y 1MA

Henry J. Yersh                                       0 shares              0%
101 Chartwell Crescent
Beaconsfield, Quebec
Canada H9W 1C2

Denis St. Hilaire                                    0 shares              0%
150 Berlioz, #157
Verdun, Quebec
Canada H3E 1K3

All Executive Officers and Directors                 0 shares              0%
as a group (2 persons)

         We have not contacted stock brokerage firms holding shares of our
common stock in "street name" to determine whether there are additional
substantial holders of our common stock.

--------------------------------------------------------------------------------
            ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------------------------------------------------------------------------------

         There have been no transactions exceeding $60,000 in the past two years
and there are no proposed transactions that exceed $60,000 to which we were or
are to be a party and any of our directors, executive officers, security holders
owning more than 5% of our common stock or any immediate family members of these
people had a direct or indirect material interest.


                                       18
<PAGE>

--------------------------------------------------------------------------------
                   ITEM 13. EXHIBITS, AND REPORTS ON FORM 8-K
--------------------------------------------------------------------------------

Financial Statements                                                     Page
                                                                         ----
Report of Thomas P. Monahan, Independent Certified Public Accountant      F-1

Balance Sheet as of December 31, 2000                                     F-2

Statements of Operations for the years and three months ended
December 31, 2000 and 1999                                             F-3 - F-4

Statement of Stockholders' Equity 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

Notes to Financial Statements                                         F-7 - F-12

Financial Statement Schedules

      All financial statement schedules are omitted because they are not
applicable or the required information is shown in the financial statements or
notes thereto.

Exhibits

      The following exhibits are included as part of this report:


      Exhibit
      Number                                          Title of Document
--------------------------------------------------------------------------------

        3.1        Certificate of Incorporation filed August 13, 1996(1)

        3.2(a)     Certificate of Amendment of the Certificate of Incorporation
                   filed April 7, 1999(1)

        3.2(b)     Certificate of Amendment of the Certificate of Incorporation
                   filed September 20, 1999(2)

        3.2(c)     Certificate of Amendment of the Certificate of Incorporation
                   filed November 20, 2000(3)

        3.2(d)     Certificate of Amendment of the Certificate of Incorporation
                   filed January 29, 2001(4)

        3.3        By-Laws of Harmony(1)

       10          Fashion Consultant Agreement dated as of December 7, 1998,
                   by and between Tanner Companies Limited Partnership and
                   Falene R. Gottbetter(1)


                                       19
<PAGE>


----------
    (1)  Incorporated by reference to the registration statement on Form
         10-SB filed July 22, 1999.
    (2)  Incorporated by reference to Form 10-QSB for the period ended September
         30, 1999 filed on November 15, 1999.
    (3)  Incorporated by reference to Form 8-K filed December 4, 2000.
    (4)  Incorporated by reference to Schedule 14C filed on January 5, 2001.

         (b)      On December 4, 2000, we filed a Current Report on Form 8-K to
                  disclose the potential change in control of our common stock
                  in connection with the proposed merger with Nixxo
                  Technologies, Inc. The merger was never completed and the
                  parties terminated the merger agreement. The Form 8-K also
                  disclosed that we completed a three-for-one forward split of
                  its common stock.


                                       20
<PAGE>

                                   SIGNATURES

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

                                HARMONY TRADING CORP.


Dated: March 29, 2001           By: /s/ HENRY J. YERSH
                                    ----------------------------------------
                                        Henry J. Yersh
                                        President & Chairman of the Board

         Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the Registrant and in the capacities indicated on this 29th day of March, 2001.


                                By: /s/ HENRY J. YERSH
                                    ----------------------------------------
                                        Henry J. Yersh
                                        President & Chairman of the Board

                                By: /s/ DENIS ST. HILAIRE
                                    ----------------------------------------
                                        Denis St. Hilaire
                                        Chief Financial Officer and Director


                                       21
<PAGE>

Exhibit Index:

    Exhibit
     Number    Title of Document
--------------------------------------------------------------------------------
    3.1           Certificate of Incorporation filed August 13, 1996(1)

    3.2(a)        Certificate of Amendment of the Certificate of Incorporation
                  filed April 7, 1999(1)

    3.2(b)        Certificate of Amendment of the Certificate of Incorporation
                  filed September 20, 1999(2)

    3.2(c)        Certificate of Amendment of the Certificate of Incorporation
                  filed November 20, 2000(3)

    3.2(d)        Certificate of Amendment of the Certificate of Incorporation
                  filed January 29, 2001(4)

    3.3           By-Laws of Harmony(1)

   10             Fashion Consultant Agreement dated as of December 7, 1998, by
                  and between Tanner Companies Limited Partnership and Falene R.
                  Gottbetter(1)


----------
    (1)  Incorporated by reference to the registration statement on Form 10-SB
         filed July 22, 1999.
    (2)  Incorporated by reference to Form 10-QSB for the period ended September
         30, 1999 filed on November 15, 1999.
    (3)  Incorporated by reference to Form 8-K filed December 4, 2000.
    (4)  Incorporated by reference to Schedule 14C filed on January 5, 2001.

<PAGE>

                               THOMAS P. MONAHAN
                          CERTIFIED PUBLIC ACCOUNTANT
                              208 LEXINGTON AVENUE
                           PATERSON, NEW JERSEY 07502
                                 (973) 790-8775
                             Fax (973) 790-8845

To The Board of Directors and Shareholders
of Harmony Trading Corp. (a development stage company)

      I have audited the accompanying balance sheet of Harmony Trading Corp. (a
development stage company) as of December 31, 2000 and the related statements of
operations, cash flows and shareholders' equity for the years ended December 31,
1999 and 2000 and for the period from inception, August 13, 1996, to December
31, 2000. These financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on these financial
statements based on my audit.

      I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I 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 and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.

      In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Harmony Trading Corp. (a
development stage company) as of December 31, 2000 and the results of its
operations, shareholders equity and cash flows for the year ended December 31,
1999 and 2000 and for the period from inception, August 13, 1996, to December
31, 2000 in conformity with generally accepted accounting principles.

      The accompanying financial statements have been prepared assuming that
Harmony Trading Corp. (a development stage company) will continue as a going
concern. As more fully described in Note 2, the Company has incurred operating
losses since the date of reorganization and requires additional capital to
continue operations. These conditions raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans as to these
matters are described in Note 2. The financial statements do not include any
adjustments to reflect the possible effects on the recoverability and
classification of assets or the amounts and classifications of liabilities that
may result from the possible inability of Harmony Trading Corp. (a development
stage company) to continue as a going concern.

                    /s/  Thomas Monahan
                    ----------------------------------------
                    Thomas P. Monahan, CPA


                                      F-1
<PAGE>

March 25, 2001
Paterson, New Jersey


                             HARMONY TRADING CORP.
                         (A development stage company)

                                 BALANCE SHEET

                                               December 31,
                                                  2000
                                               -----------
Assets
Current assets
  Cash and cash equivalents                      $  4,025
                                                 --------
  Current assets                                 $  4,025

Property and equipment                               -0-

Total assets                                     $  4,025
                                                 ========

                      Liabilities and Stockholders' Equity

Current liabilities
   Accounts payable and accrued expenses         $ 36,824
                                                 --------
  Total current liabilities                      $ 36,824

Stockholders' equity
  Preferred stock authorized
5,000,000 shares, $0.001 par
value each. At December 31, 2000 there
are -0- shares outstanding.


  Common Stock authorized 20,000,000
shares, $0.001 par value each. At
December 31, 2000, there are 9,330,000 shares
outstanding respectively                            9,330

Additional paid in capital                         14,110
Deficit accumulated during development
stage                                             (56,239)
                                                 --------
Total stockholders' equity                        (32,799)
                                                 --------
Total liabilities and stockholders' equity       $  4,025
                                                 ========

                 See accompanying notes to financial statements.


                                      F-2
<PAGE>


                             HARMONY TRADING CORP.
                          (A development stage company)
                             STATEMENT OF OPERATIONS
                                                               For the period
                                 For the          For the      from inception
                               year ended        year ended     August 13, 1996
                               December 31,      December 31,   to December 31,
                                  1999              2000            2,000
                                ---------        ---------     ---------------
Revenue                         $ 15,918         $ 17,438         $ 37,356

Costs of goods sold                 -0-              -0-              -0-
                                --------         --------         --------
Gross profit                    $ 15,918         $ 17,438         $ 37,356

Operations:
  General and
   administrative                 41,526           26,419           93,867
  Depreciation and
   amortization                     -0-              -0-              -0-
                                --------         --------         --------
  Total expense                   41,526           26,419           93,867
                                --------         --------         --------
Income (loss) from
 operations                      (25,608)          (8,981)         (56,511)

Other income
   Interest income                   272             -0-               272
                                --------         --------         --------
Total Other Income                   272             -0-              -0-
                                --------         --------         --------
Income (loss)                   $(25,336)        $ (8,981)        $(56,239)
                                ========         ========         ========


Net income (loss)
 per share - basic                 (0.01)           (0.00)
                               =========        =========
Number of shares
 outstanding-  basic           9,330,000        9,330,000
                               =========        =========

                See accompanying notes to financial statements.


                                      F-3
<PAGE>

                             HARMONY TRADING CORP.
                         (A development stage company)
                            STATEMENT OF OPERATIONS

                                  For the          For the
                               three months     three months
                               December 31,     December 31,
                                   1999             2000
                                ---------        ---------
Revenue                         $   3,787        $   2,213

Costs of goods sold                 -0-               -0-
                                ---------        ---------
Gross profit                    $   3,787        $   2,213

Operations:
  General and
   administrative                  21,007            4,844
  Depreciation and amortization      -0-              -0-
                                ---------        ---------
  Total expense                    21,007            4,844
                                ---------        ---------
Income (loss) from
 operations                       (17,220)          (2,631)

Other income
  Interest income                    -0-              -0-
                                ---------        ---------
Total Other Income                   -0-              -0-
                                ---------        ---------
Income (loss)                   $ (17,220)       $  (2,631)
                                =========        =========


Net income (loss)
 per share - basic                  (0.00)           (0.00)

Number of shares
 outstanding-  basic            9,330,000        9,330,000
                                =========        =========

                See accompanying notes to financial statements.


                                      F-4
<PAGE>

                             HARMONY TRADING CORP.
                         (A development stage company)

                        STATEMENT OF STOCKHOLDERS EQUITY

                                                         Deficit
                                                       accumulated
                                            Additional   during
                       Common     Common     paid in   development
     Date              Stock      Stock      Capital      stage        Total
     ----            ---------    ------     --------   ---------    ---------
December 31,
1996 balance (1)     6,000,000    $6,000     $(4,000)                $   2,000
Net income                                              $ (10,865)   $ (10,865)
                     ---------    ------     -------    ---------    ---------
December 31,
1997 balance         6,000,000     6,000     $(4,000)   $ (10,865)    $ (8,865)
Net loss                                                  (10,785)     (10,785)
                     ---------    ------     -------    ---------    ---------
December 31,
1998 balance         6,000,000     6,000     $(4,000)   $ (21,650)     (19,650)

Sale of shares       3,030,000     3,030      22,220                    25,250

Contribution
of services                                      375                       375

Issuance of
shares for
legal services         300,000       300       2,200                     2,500

Less offering
expenses                                      (6,685)                   (6,685)

Net Loss                                                  (25,608)     (25,608)
                     ---------    ------    --------    ---------    ---------
December 31,
1999 balance         9,330,000    $9,330    $ 14,110    $ (47,258)    $(23,818)

Unaudited
Net loss                                                   (8,981)      (8,981)
                     ---------    ------    --------    ---------    ---------
December 31,
2000 balance         9,330,000    $9,330    $ 14,110    $ (56,239)    $(32,799)
                     =========    ======    ========    =========    =========

                 See accompanying notes to financial statements


                                      F-5
<PAGE>

                              HARMONY TRADING CORP.
                          (A development stage company)
                             STATEMENT OF CASH FLOWS



                                For the          For the      For the period
                               year ended      year ended     from inception
                              December 31,     December 31,   August 13, 1996
                                 1999              2000      to December 31,
                                                                    2000
                               ---------        ---------        ---------
CASH FLOWS FROM OPERATING
ACTIVITIES
  Net income (loss)             $(25,608)         $(8,981)       $(56,239)
  Non cash transaction             2,875                            4,875
  Corporate taxes                   (325)
  Accounts payable and
   accrued expenses                6,000            9,824          36,824
                                --------          -------        --------
TOTAL CASH FLOWS FROM            (17,058)             843         (14,540)
OPERATIONS

CASH FLOWS FROM INVESTING
ACTIVITIES
  Marketable securities            4,000             -0-             -0-
                                --------          -------        --------
TOTAL CASH FLOWS FROM
INVESTING ACTIVITIES               4,000             -0-             -0-

CASH FLOWS FROM FINANCING
ACTIVITIES
  Officer loan                    (2,325)
  Sale of stock net of
   offering expenses              18,565                           18,565
                                --------          -------        --------
TOTAL CASH FLOWS FROM
FINANCING ACTIVITIES              16,240                           18,565
                                --------          -------        --------
NET INCREASE (DECREASE)
 IN CASH                           3,182              843        $  4,025
CASH BALANCE BEGINNING
 OF PERIOD                          -0-             3,182            -0-
                                --------          -------        --------
CASH BALANCE END OF PERIOD      $  3,182          $ 4,025        $  4,025
                                ========          =======        ========
SUPPLEMENTAL DISCLOSURE OF
 CASH FLOW INFORMATION:
Cash paid for interest          $   -0-           $   -0-        $   -0-
Cash paid for income taxes      $    325          $   -0-        $    325
                                ========          =======        ========

             See accompanying notes to financial statements


                                      F-6
<PAGE>

                             HARMONY TRADING CORP.
                         (A development stage company)
                         Notes to Financial Statements
                               DECEMBER 31, 2000

Note 1. Organization of Company and Issuance of Common Stock

      a. Creation of the Company

      Harmony Trading Corp., (the "Company") was formed under the laws of New
York on August 13, 1996 and was originally authorized to issue 200 shares of
common stock, without par value each. On April 6, 1999, the Company amended its
certificate of incorporation increasing the authorized number of shares of
common stock to 20,000,000, $0.001 par value each and increasing the authorized
number of shares of preferred stock to 5,000,000, $0.001 par value each.

      On September 20, 1999, the Company amended its certificate of
incorporation to authorize an aggregate of 200,000,000 shares of common stock,
$.001 par value each and 5,000,000 shares of preferred stock, $.001 par value
each.

      b. Description of the Company

      The Company is considered to be a development stage business that is in
the business of the direct selling of women's apparel and accessories through
personal appointments and fashion shows.

      c. Issuance of Shares of Common Stock

      On January 5, 1998, the Company sold an aggregate of 6,000,000 shares of
common stock for $1,000 in marketable securities or $0.0003 per share.

      In January, 1998, Paul Gottbetter, President of the Company, gifted
750,000 shares of common stock to Adam S. Gottbetter.

      The Company has sold, pursuant to the terms of Rule 504 of Regulation D of
the Securities Act of 1933, as amended, an aggregate of 3,030,000 shares of
common stock for an aggregate of $25,250 less $6,685 in offering expenses.

Note 2-Summary of Significant Accounting Policies

      a. Basis of Financial Statement Presentation

      The accompanying unaudited financial statements have been prepared on a
going concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The Company
incurred net losses of $56,239 for the period from inception, August 13, 1996,
to December 31, 2000. These factors indicate that the Company's continuation as
a going concern is dependent upon its ability to have positive cash flows from
operations. The Company's future capital requirements will depend on numerous
factors including, but not limited to, continued progress in its selling
capabilities and implementing its marketing strategies. The Company plans to
engage in such ongoing financing efforts on a continuing basis.


                                      F-7
<PAGE>

      The financial statements presented consist of the balance sheet of the
Company as at December 31, 2000 and the related statements of operations and
cash flows and stockholders' equity for the year ending December 31, 1999 and
2000, and for the period from inception, August 13, 1996, to December 31, 2000.


      b. Cash and cash equivalents

      The Company treats temporary investments with a maturity of less than
three months as cash.

      c. Revenue recognition

      Revenue is recognized when products are shipped or services are rendered.
Commission income is recognized when products are shipped or services are
rendered.

      d. Selling and Marketing Costs

      Selling and Marketing - Certain selling and marketing costs are expensed
in the period in which the cost pertains. Other selling and marketing costs are
expensed as incurred.

      e. Use of Estimates

      The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that effect 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.

      f. Significant Concentration of Credit Risk

      At December 31, 2000, the Company has concentrated its credit risk by
maintaining deposits in several banks. The maximum loss that could have resulted
from this risk totaled $-0- which represents the excess of the deposit
liabilities reported by the banks over the amounts that would have been covered
by the federal insurance.

      g. Asset Impairment

      The Company adopted the provisions of SFAS No. 121, Accounting for the
impairment of long lived assets and for long-lived assets to be disposed of
effective January 1, 1996. SFAS No. 121 requires impairment losses to be
recorded on long-lived assets used in operations when indicators of impairment
are present and the estimated undiscounted cash flows to be generated


                                      F-8
<PAGE>

by those assets are less than the assets' carrying amount. SFAS No. 121 also
addresses the accounting for long-lived assets that are expected to be disposed
of. There was no effect of such adoption on the Company's financial position or
results of operations.

      h. Property and Equipment

      Property and equipment are stated at cost less accumulated depreciation.
Depreciation is computed over the estimated useful lives using the straight line
methods over a period of seven years. Maintenance and repairs are charged
against operations and betterment's are capitalized.


      i. Recent Accounting Standards

      Accounting for Derivative Instruments and Hedging Activities

      Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" (SFAS 133) was issued in June
1998. It is effective for all fiscal years beginning after June 15, 1999. The
new standard requires companies to record derivatives on the balance sheet as
assets or liabilities, measured at fair value. Gains or losses resulting from
changes in the values of those derivatives would be accounted for depending on
the use of the derivatives and whether they qualify for hedge accounting. The
key criterion for hedge accounting is that the hedging relationship must be
highly effective in achieving offsetting changes in fair value or cash flows.
The Company does not currently engage in derivative trading or hedging activity.
The Company has adopted and there was no impact on operating results or
financial position.

      Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use

      In March of 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use". SOP 98-1 requires computer
software costs associated with internal use software to be charged to operations
as incurred until certain capitalization criteria are met. SOP 98-1 is effective
beginning January 1, 1999. The Company has adopted this Statement and there was
no impact on operating results or financial position.

Note 3 - Related Party transactions

      a. Issuance of Shares of Common Stock

      On January 5, 1998, the Company sold an aggregate of $1,000,000 shares of
common stock for $1,000 in marketable securities or $0.001 per share.


                                      F-9
<PAGE>

      In January, 1998, Paul Gottbetter, President of the Company, gifted
750,000 shares of common stock to Adam S. Gottbetter.

      Paul Gottbetter and Adam S. Gottbetter are father and son.

      b. Office Location

      The Company occupies office space on a month to month basis at 8 Harmony
Lane, Hartsdale, New York 10530 for a rent of $250 per month on a month-to-month
basis.

      c. Change in Management

      On August 28, 2000, Group InterCapital, Inc., a venture capital firm,
purchased from Paul Gottbetter in a private transaction for $100,000, 1,735,000
shares of common stock, which is approximately 55.8% of the outstanding common
stock, thereby acquiring control of the Company. The source of funds to purchase
the securities was from Group InterCapital's working capital.

      Group InterCapital has replaced our board of directors by appointing Henry
J. Yersh and Denis St. Hilaire. Mr. Yersh was also appointed as President and
Chief Executive Officer and Mr. St. Hilaire was appointed as our Chief Financial
Officer.

Note 4 - Commitments and Contingencies

      At December 31, 2000, the Company has not entered into any contracts or
commitments.

Note 5 - Income Taxes

      The Company provides for the tax effects of transactions reported in the
financial statements. The provision if any, consists of taxes currently due plus
deferred taxes related primarily to differences between the basis of assets and
liabilities for financial and income tax reporting. The deferred tax assets and
liabilities, if any represent the future tax return consequences of those
differences, which will either be taxable or deductible when the assets and
liabilities are recovered or settled. As of December 31, 2000, the Company had
no material current tax liability, deferred tax assets, or liabilities to impact
on the Company's financial position because the deferred tax asset related to
the Company's net operating loss carryforward and was fully offset by a
valuation allowance.

      At The Company has adopted and there was no impact on operating results or
financial position, the Company has net operating loss carry forwards for income
tax purposes of $56,239 This carryforward is available to offset future taxable
income, if any, and expires in the year 2010. The Company's utilization of this
carryforward against future taxable income may become subject to an annual
limitation due to a cumulative change in ownership of the Company of more than
50 percent.


                                      F-10
<PAGE>

      The components of the net deferred tax asset as of The Company has adopted
and there was no impact on operating results or financial position are as
follows:

Deferred tax asset:
     Net operating loss carry forward         $ 19,121
     Valuation allowance                      $(19,121)
                                              --------
     Net deferred tax asset                   $    -0-
                                              ========

      The Company recognized no income tax benefit for the loss generated in the
period from inception, August 13, 1996, to December 31, 2000.

      SFAS No. 109 requires that a valuation allowance be provided if it is more
likely than not that some portion or all of a deferred tax asset will not be
realized. The Company's ability to realize benefit of its deferred tax asset
will depend on the generation of future taxable income.

      Because the Company has yet to recognize significant revenue from the sale
of its products, the Company believes that a full valuation allowance should be
provided.

Note 7 - Preferred Stock

      The Company's authorized capital stock consists of 5,000,000 Shares of
Preferred Stock, par value $.001 per share.

      The Board of Directors of the Company has the authority to establish and
designate any shares of stock in series or classes and to fix any variations in
the designations, relative rights, preferences and limitations between series as
it deems appropriate, by a majority vote.

      The preferred stock may be issued in series, each of which may vary, as
determined by the board of directors, as to the designation and number of shares
in such series, voting power of the holders thereof, dividend rate, redemption
terms and prices, voluntary and involuntary liquidation preferences, and
conversion rights and sinking fund requirements, if any, of such series.

      As of December 31, 2000, the number of shares of preferred stock
outstanding is -0-.

Note 8 - Business and Credit Concentrations

      The amount reported in the financial statements for cash approximates fair
market value. Because the difference between cost and the lower of cost or
market is immaterial, no adjustment has been recognized and investments are
recorded at cost.


                                      F-11
<PAGE>

      Financial instruments that potentially subject the company to credit risk
consist principally of trade receivables. Collateral is generally not required.


                                      F-12