SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549


                                  FORM 10-K

[X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934 [NO FEE REQUIRED]

                 For the fiscal year ended December 31, 2000.

                                      OR

[ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
      EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

                      Commission file number: 000-26731

                            PACIFIC WEBWORKS, INC.
             ---------------------------------------------------
            (Exact Name of Registrant as Specified in Its Charter)

NEVADA                                              87-0627910
-------                                             ----------
(State or other jurisdiction of                     (I.R.S. Employer
incorporation or organization)                      Identification No.)

1760 Fremont Drive, Salt Lake City, Utah            84104
----------------------------------------            ------
(Address of principal executive offices)           (Zip code)

180 South 300 West, Suite 400, Salt Lake City, Utah 84101
---------------------------------------------------------
(Former address)

Issuer's telephone number, including area code: (801) 578-9020

Securities registered pursuant to Section 12(b) of the Act: None.
Securities registered pursuant to Section 12(g) of the Act: Common Stock

Check whether the issuer (1) 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

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

State issuer's revenue for its most recent fiscal year: $4,954,383.

As of March 8, 2001 the registrant had 18,337,475 shares of common stock
outstanding.  The aggregate market value of the voting stock held by
non-affiliates as of that date was $20,579,733.

Documents incorporated by reference: None

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                              TABLE OF CONTENTS

                                    PART I

Item 1.  Business...........................................................3
Item 2.  Properties........................................................11
Item 3.  Legal Proceedings.................................................11
Item 4.  Submission of Matters to a Vote of Security Holders...............11

                                   PART II

Item 5.  Market For Common Equity and Related Stockholder Matters..........11
Item 6.  Selected Financial Data...........................................12
Item 7.  Management's Discussion and Analysis and Results of Operations....13
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 8.  Financial Statements and Supplementary Data.......................22
Item 9.  Changes in and Disagreements With Accountants
         on Accounting and Financial Disclosure............................22

                                   PART III

Item 10.  Directors and Executive Officers of Pacific WebWorks.............22
Item 11.  Executive Compensation...........................................24
Item 12.  Security Ownership of Certain Beneficial Owners and Management...24
Item 13.  Certain Relationships and Related Transactions...................26

                                   PART IV

Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K..26





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                          FORWARD LOOKING STATEMENTS

      In this annual report references to "Pacific WebWorks," "we," "us," and
"our" refer to Pacific WebWorks, Inc.

      This annual report contains certain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995.  For this
purpose any statements contained in this Form 10-K that are not statements of
historical fact may be deemed to be forward-looking statements.  Without
limiting the foregoing, words such as "may," "will," "expect," "believe,"
"anticipate," "estimate" or "continue" or comparable terminology are intended
to identify forward-looking statements.  These statements by their nature
involve substantial risks and uncertainties, and actual results may differ
materially depending on a variety of factors, many of which are not within
Pacific WebWorks' control.  These factors include but are not limited to
economic conditions generally and in the industries in which Pacific WebWorks
may participate; competition within Pacific WebWorks' chosen industry,
including competition from much larger competitors; technological advances and
failure by Pacific WebWorks to successfully develop business relationships.


                                    PART I

                              ITEM 1.  BUSINESS

a) General Development.

      We made several acquisitions during the 2000 fiscal year, including
acquisition of IntelliPay, Inc., a Delaware corporation, as our wholly owned
subsidiary in April 2000.  Then in August of 2000 we acquired World Commerce
Network, LLC.  Our 2001 fiscal year began with the acquisition of Logio, Inc.
as our wholly owned subsidiary, in February of 2001.  (See, "Subsidiaries,"
below, for further details.)

b) Our Business.

      Pacific WebWorks is an application service provider that develops
business software technologies for Internet merchants.  We specialize in
turn-key applications allowing small to medium-sized business owners to expand
their business onto the Internet.  Our product family provides tools for web
site creation, management and maintenance, statistics, reporting, surveys,
marketing, hosting and e-commerce enabling, all within the small to
medium-size business niche.

      We initially focused entirely on virtual retailing software solutions,
meaning merchants that do not have a physical store location and would exist
only on the Internet. Due to requests in the marketplace we expanded our
technologies to include features for small to medium-sized physical merchants
in addition to our virtual merchants. We plan to expand our software family to
include features that integrate the physical store information systems with
the Internet store information systems.  This expansion may include features
such as Cashier/ POS (point of sale) management, receiving, ordering, tender,
store operations, human resources, POS peripherals management, inventory and
accounting.  At the same time we expect our virtual software will be expanded
to include featured items and benefits, catalog management, order development,
advanced 1-to-1 marketing methods, sophisticated item comparison and
selection, and pre-sales qualification.  This is expected to give the merchant
a complete solution for all physical store and Internet concerns and at the
same time reduces costs of operations and introduces new profit centers for
the merchant.

Our Subsidiaries

      IntelliPay.  On April 4, 2000 we acquired IntelliPay, Inc.
("IntelliPay") as our wholly owned subsidiary through a stock-for-stock
exchange.  (See, "Item 7:  Management's Discussion and Analysis of Financial
Conditions and Results of Operations - Acquisitions," below, for accounting
treatment.)  We had been working

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closely with IntelliPay for about two years and during 1999 we entered into a
joint venture with IntelliPay to establish MainStreetSquare.com, an online
shopping portal.  IntelliPay assists companies in their use of e-commerce web
sites and specializes in providing online, secure and real-time payment
processing services for businesses of all sizes.  We refer to its products and
services as the IntelliPay transaction gateway.  IntelliPay's transaction
gateway allows a business to accept real time payments from their web site,
Internet appliances, kiosks, phone, fax or storefront.  IntelliPay's systems
use industry standard security components and methods, the same standards used
by all major commerce sites, and has been tested under strict banking network
procedures.

      The IntelliPay transaction gateway provides ePayment system components
which help a business process and manage its Internet income.  Point-of-sale
professionals provide technical support and ePayment professionals can even
help the business locate an Internet-approved merchant account if needed.  The
IntelliPay LinkSmart connects the business' web site to IntelliPay's secure
servers.  Once customers enter the necessary data on a secure form, IntelliPay
quickly processes the transaction in real-time (2 - 5 seconds) and returns the
customer back to the
business site.

      IntelliPay also provides methods for enterprise-level businesses to link
IntelliPay's various products, services and features into their ecommerce web
sites and port live data streams into back-office systems.  Additionally,
IntelliPay continues an aggressive research and development campaign designed
to deliver new feature services and payment products to their merchant
customers.  Recent releases include:

   .  Smart Pages, a method of which IntelliPay hosts the business' payment
      pages while the business maintains complete control over the "look and
      feel" of those pages;
   .  Duplicate Transaction System which allows merchants to customize
      IntelliPay's transaction behaviors based on a detected duplicate
      transaction;
   .  New Address Verification System rules which allow merchants to automate
      IntelliPay responses to credit card address verification responses, and
      more.

      In December 2000 IntelliPay moved into new corporate headquarters
located in Silicon Valley, California.  IntelliPay upgraded its data center
with state of the art servers which increased its processing capabilities.  As
of December 2000, more than 8,500 merchants use IntelliPay's products and it
has completed proprietary certifications with FDC, NDC, NOVA, Vital and FTB.
For more information on IntelliPay, visit www.intellipay.com.

      World Commerce Network, LLC.  World Commerce Network, LLC was created in
December 1999 as a marketing company.  Its mission was to sell the products of
Pacific WebWorks, U.S. Merchant Systems and IntelliPay.  (See, "Item 7:
Management's Discussion and Analysis of Financial Conditions and Results of
Operations - Acquisitions," below, for accounting treatment.)  The members
included Pacific WebWorks and U.S. Merchant Systems, Inc.  In March 2000 we
purchased an additional 1% interest in World Commerce, which gave us a 51%
total interest in World Commerce.  In August of 2000, we acquired the
remaining 49% of World Commerce.

      From December 1999 through July 2000 World Commerce conducted seminars
focused on small business owners and home business Internet users.  At the
time World Commerce was selling products they included Visual WebTools(TM),
merchant accounts, the IntelliPay transaction gateway, as well as education
and training.  World Commerce had established contract relationships with
Productive Seminars, Inc. in St. George, Utah.  Productive Seminars conducted
the seminars throughout the country for World Commerce.  However, World
Commerce has ended its relationship with Productive Seminars and ceased
seminar marketing as of July, 2000.  During the time World Commerce was
providing seminars we acquired approximately 3,000 new customers.  While we
may at some future date re-implement seminar marketing, we currently focus on
company direct selling and acquisition of reseller and strategic alliance
distribution channels.

      Logio, Inc.  On October 31, 2000, Pacific WebWorks and Logio, Inc., a
Nevada corporation, entered into an Agreement and Plan of Reorganization in
which Pacific WebWorks agreed to acquire Logio as a wholly-owned subsidiary
through a stock-for-stock exchange.  (See, "Item 7:  Management's Discussion
and Analysis of Financial Conditions and Results of Operations -
Acquisitions," below, for accounting treatment.)  The acquisition was

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contingent upon the approval of the stockholders of Logio and registration of
the shares under the Securities Act of 1933.  The registration statement on
Form S-4 was declared effective on December 20, 2000 and Logio stockholder
approval was obtained in January 2001.  We finalized the acquisition on
February 8, 2001 when we filed Articles of Exchange.

       Logio, Inc., formerly WordCruncher Internet Technologies, Inc., is a
development stage company historically engaged in the development and
marketing of a focused Internet directory and search engine which serves the
needs of the business professional.  Logio launched its web site, logio.com,
on March 19, 2000.  The web site was designed to provide a broad spectrum of
the information and services that are required by business people in their
daily work activities.  In June 2000, Logio shifted its business model towards
the generation of revenues from set-up and maintenance fees from the sale of
its directory in private label form to certain Internet sites and corporate
Intranets.

      Logio currently works in conjunction with Pacific WebWorks, Inc. and its
subsidiaries to jointly develop content related products and services.  The
acquisition of Logio has also added valuable components of management and
technological infrastructure for further growth and expansion of Pacific
WebWorks, Inc. and its subsidiaries.

Our Market

      We market our products to small businesses.  According to Morgan Stanley
Dean Witter, small business spending in the United States on Internet service
applications is conservatively forecasted to grow from $197 million in 2000 to
$1.5 billion in 2004, or about 200% calculated average growth rate.  This is
about half of all small business application service provider spending, and
represents one of the last large Internet business marketplaces with no
established leader in place.  The other half of small business application
service provider includes Internet applications like e-mail.

      Total United States spending by all size companies is forecasted to grow
from $960 million in 2000 to $4.25 billion in 2004 (Source: Morgan Stanley
Dean Witter, The Phillips Group).  Small companies, with fewer than 100
employees, but not home-based businesses, represent about 70% of all
forecasted application service provider spending.  There were about 7.5
million such United States business in 2000, growing to about 7.9 million in
2004 (Source: U.S. Census).  Of that number, about 75,000 companies, or 1% use
application service provider services today.  By 2004, that number is expected
to grow substantially to three million (Source: eMarketer, The ASP Report,
November 2000), or about 38%.  According to International Data Corp, the
number of companies selling online in 2000 is 15%.  That percentage is
expected to grow to 50% by 2004.

Pacific WebWorks' Products and Services

      Even though small business typically understands how traditional brick
and mortar businesses operate, they don't necessarily know how to replicate
business processes effectively and economically on the Internet.  Pacific
WebWorks assists small businesses in succeeding online through our software
tools, Visual WebTools(TM) and education.
      We provide a one-stop solution that includes an integrated suite of
e-commerce software tools, plus hosting, site management, web design services,
and education.  By leveraging a shared commerce platform across many
customers, Pacific WebWorks brings economy of scale to our customers.  Because
of this, we believe our clients can focus on their business instead of
technology, therefore they can achieve a much faster return on investments
made in technology and succeed on the Internet.

      Products

Visual WebTools Version 4.0 ("V4") is a suite of software programs that fit
together to perform the basic business functions we believe are the most
effective on the Internet.  The V4 tools include:

      .  WebWizard - Build and maintain a professional-looking web site.


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      .  WebChannels - Deliver your message with this e-mail marketing tool.
      .  WebContacts - Organize your contact database.
      .  Web Profiler Tool - Create forms and questionnaires to gather
             demographic data.
      .  WebStats - Track the activity of your site.
      .  ClipOn Commerce(TM) - Sell your products and collect payments.

WebWizard.  WebWizard is an easy-to-use Web page design program that is simple
enough for the novice, yet powerful enough for Web design professionals.  It
incorporates sophisticated site components like tables, frames and multimedia
files in a straightforward, menu driven process.  No complicated programming
is required.  WebWizard allows businesses to quickly and easily create,
update, modify, and enhance their web sites.  Changes can be made 24 hours a
day, 7 days a week from any Internet-connected Windows PC.  Changes are
updated automatically and placed online within minutes.  Businesses can
manipulate their site's layout, colors, content, tables, and graphics easily.
WebWizard includes a library of hundreds of graphics which are accessible by
our clients.

Web Contacts, WebChannels and web profiling tool databases are complex,
expensive and high maintenance.  They are also important and powerful
components of Internet marketing.  Pacific WebWorks has developed
sophisticated tools to help our small business clients on the Internet.
WebChannels, WebContacts and web profiling tool give small businesses the
tightly integrated tools they need to conduct effective, easy-to-manage
Internet-based marketing campaigns.

WebContacts is a contact management program.  Our clients can maintain a list
of their web site visitors if the visitor elects to leave behind contact
information.  This allows our clients to continue to market to their
customers.  We believe our customers have potential to increase sales if they
can continue to communicate with their customers.

WebChannels is an e-mail distribution program that enables our customers to
send customized e-mails to their base of subscribers.

Web profiling tool is a form and survey creation tool that helps capture
feedback and valuable information from customers and web site visitors.  Our
clients can create customizable forms, surveys and interactive questionnaires.
Web profiling tool includes a catalog of pre-made questions or the client can
create his own.  For example a client could add support for online
subscription services, such as weekly newsletters, coupons and special deals.

WebStats enables our clients to watch what their customers are doing.
WebStats is a statistics program that provides detailed reports on web site
visitors including the path their customers take throughout the web site.
We've made it easy to discover what browsers and operating systems web site
visitors are using, what web sites generate page hits, and what pages are the
most popular.  WebStats can produce reports of invaluable business
information, including year-long sales trends and the effectiveness of our
clients' sites.

ClipOn Commerce(TM)   is a e-storefront and product management system,
complete with shopping cart technology.  With ClipOn Commerce, our clients
build an Internet storefront quickly and efficiently. They can create a
complete product catalog, organize and search products by unlimited categories
and import/export to and from their database.  ClipOn Commerce has support to
include a merchant account and is integrated with our IntelliPay transaction
gateway, which allows our clients to accept all major credit cards and
electronic checks.  ClipOn Commerce also has support for QuickBooks
accounting software.

      Services

      Pacific WebWorks provides more than our Visual WebTools(TM).  We also
assist our customers with education and site design services.  We believe this
information helps our clients understand how to use the Internet more
effectively.

E-Camp is a three-day training program designed to teach aspects of doing
business on the Internet.

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Idea Center: Our online Idea Center promotes our customers' successes by
providing them with current information related to the Internet and what other
successful business owners are doing online.

Rent -a-Pro offers custom web site design services to clients who elect to
hire Pacific WebWorks to build their web site for them, rather than building
it themselves.

Technical Support.  Pacific WebWorks offers support via online chat or e-mail
from 7 a.m. to 8 p.m. (MST), or by phone from 8 a.m. to 5 p.m.

Hosting Infrastructure.   Users of Visual WebTools(TM) never have to own their
Internet technology.  Pacific WebWorks customers' web sites are hosted on
behalf of our clients, therefore eliminating the cost of ownership for our
clients.

Place-to-Vacation is a marketing tool that helps our users attract Internet
traffic to their web site by giving away a chance to win a free vacation.

Intellipay Products

      ePayment System.  A rich variety of features and tools gives IntelliPay
merchant customers increased control over one of their most important
lifelines, their income revenue streams. One of IntelliPay's missions is to
stay in close contact with our business customers and develop features and
products that online businesses actually need or want.  IntelliPay supports
all major card types including Visa, MasterCard,  American Express, Discover,
Diners Club and JCB. Also, support is provided for Visa and MasterCard debit
(check) cards and Level Two corporate/commercial cards through various bank
networks. Transaction types include all industry standard transactions such as
normal authorizations, pre-authorizations intended for delayed settlement, the
so-called "force" allowing a transaction authorized offline (possibly a voice
authorization) to be settled, credits (for refunds) and an
IntelliPay innovation "AVS Only", allowing merchants to retreive an AVS score
and verify the account validity. Innovative business rules developed by
IntelliPay allow our customers to control transaction level behavior depending
on AVS scores, duplicate transaction attempt detection, and more. IntelliPay
also automatically settles merchant batches nightly so merchants are freed
from laboriously forcing settlement via manual or programmatic methods, which
also helps reduce merchant costs by settling within the 24-hour window
mandated by most merchant accounts. IntelliPay's system is fully transportable
meaning that an IntelliPay business customer can switch web site hosting
companies, switch between most e-store softwares or switch to or from almost
any merchant account provider.  Our system can follow him at no additional
charges and minimal technology issues.

      ExpertLink(TM).  ExpertLink is IntelliPay's proprietary connection
protocol for high-volume Internet businesses requiring reliable, high velocity
real-time transaction authorizations linked to their own secure web site
and/or back office systems. ExpertLink is a standards-based secure
communications method allowing web-developers and application developers to
build in IntelliPay's ePayment processing and various unique features
including batch management commands, duplicate transaction detection and
management, and much more. A merchant usually purchases ExpertLink or
LinkSmart, and both come with Smart Terminal and the Secure Account Management
System.

      LinkSmart(TM).  LinkSmart gives online merchants IntelliPay's ePayment
features with minimized technical installation on the merchant side. With
LinkSmart, the merchant does not need to pay for installation and maintenance
of expensive secure servers since LinkSmart serves the secure, customizable
payment pages for them. LinkSmart offloads many expensive mission-critical
e-commerce hurdles from the merchant. Using IntelliPay's proprietary
SmartPages(TM) technology, the LinkSmart merchant can upgrade and control the
entire look and feel of the IntelliPay hosted payment pages.

      Smart Terminal(TM).  Smart Terminal allows merchants to securely log
into their IntelliPay account from any Internet browser and authorize manual
transactions and orders they've received through email, voice, fax or other
offline methods. With Smart Terminal most merchants don't need to buy
expensive terminal devices and this can

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save them hundreds, if not thousands, in expenses. Smart Terminal supports all
industry-standard transactions including normal authorizations,
authorization-only for delayed settlement, settlement for non-IntelliPay
authorized transactions, credits and more. Most merchants receive Smart
Terminal along with LinkSmart or ExpertLink, but Smart Terminal can also be
purchased as a standalone product.

      Secure Account Management System ("SAMS").  IntelliPay merchants can
securely log in to IntelliPay's Secure Account Management System from any web
browser to configure and control various IntelliPay components and behaviors.
They can manage today's authorized transaction batches, control passwords,
enforce transaction data components, control various features such as our new
duplicate transaction detection and management system, control email
transaction receipts, access Smart Terminal, control LinkSmart payment page
contents, target returning live data streams, configure Visa-required invoice
numbering, and more.

Competition

      Our market is relatively new, very competitive and subject to rapid
technological change.  We expect competition to persist, increase, and
intensify in the future as the markets for our products and services continue
to develop and as additional companies enter our markets.  A number of
companies are now providing Internet services to small businesses.  They
include organizations like Microsoft, vJungle, Bigstep.com, Websitepros,
Agillion, Bizfinity, Vista.com, an HostPro.

      At the present time, we have not identified any other companies that are
using the same approach as Pacific WebWorks .  Nonetheless, there is always
the potential that other, larger interests will choose to enter the market we
are developing, or that a new market may emerge.  Although we feel the market
is vast enough for many technology providers, we may not be able to compete
effectively with current and future competitors.

Sales and Marketing

      We do not believe that our competitors are effectively targeting our
market niche: A totally Internet based, end-to-end business solution for small
and medium-sized businesses.  We believe that our products will allow
businesses to generate leads, sell products, run sales promotions, capture
demographic information about web site visitors, communicate with web site
visitors, and obtain intelligent information about who is visiting their web
sites and what they are doing while they are there.  Our products allow our
customers to stay in complete control of their web sites and provide tools,
which can facilitate a successful Internet experience for them.

      We market and sell our products through reseller channels, our internal
sales force and strategic partnerships.  We sell our products to partners at
wholesale, who then mark the products up and sell them at retail.  We also
sell our products through resellers who are paid a commission for each
merchant who purchases our products.  Each merchant must sign a purchase
agreement with the reseller, which the reseller must in turn provide to us. We
then provide software to the resellers' own merchants which allows these users
to create Internet web sites and/or complete e-business solutions. We provide
the initial reseller with training in the use of the software.  The reseller
is an independent contractor and is obligated to pay the amounts due under the
agreement even if payments from the merchant are not received.

      We believe we may be able to develop a substantial presence in our
target market through a combination of marketing strategy, unique proprietary
technology, technical expertise, and early entry into our target market.  It
is our opinion that in the past, businesses which have attempted to maintain
interactive web sites and conduct business on the Internet have either
developed technical expertise themselves, paid employees to create and
maintain their web sites, or retained contract "web professionals" to do so.
We believe that Visual WebTools(TM) allows small businesses, at a relatively
small cost, to participate in Internet commerce by creating and managing their
own Internet web sites and storefronts.

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Major Customers

      During fiscal year 1998 our management changed our strategy from
contract programming to focus on development of Internet software applications
and marketing of these Internet tools and de-emphasized contract programming.
We had a total client base of 85 and four major customers who individually
accounted for 10% or more of our total revenues.  Internet Yellow Pages
accounted for 26%, or $44,890, of total 1998 revenues.  Ex.Sight Co. accounted
for 16%, or $28,161, of total revenue.  CUSA Technologies accounted for 12%,
or $21,271 of total revenues.  American Home Business contributed 14%, or
$24,422, in sales.

      During fiscal year 1999 we increased our client base to several hundred
with two of our sales channels providing 41% of our revenue.  Lauman
Enterprise, a reseller, accounted for approximately $60,000 or 20% of total
revenues in 1999.  US Merchant Systems, Inc. supplied us with marketing
expertise and merchant accounts for our customers, and accounted for
approximately $65,000, or 21% of our revenue for 1999.  We entered into a
joint venture with US Merchant Systems in December of 1999 to create World
Commerce Network.  World Commerce Network became the seminar marketing
operations for sales of Pacific WebWorks technologies in early 2000.

      During fiscal year 2000 we increased our client base to several
thousand.  As a result, we no longer are dependent on a limited number of
significant customers or resellers.

Product Development

      Pacific WebWorks, Inc. is currently working on a new release of its
Visual WebTools(TM) software.  This release is primarily a newly developed
user interface that we believe will be much easier to use by our merchants
therefore making our software more appealing to new prospective customers.

      As part of our new user interface structure we are making it possible to
separate our WebWizard and ClipOn Commerce Products into stand alone product
offerings.  This will allow the company to greatly enhance our strategic
alliance and business development efforts by offering low cost products that
can be widely distributed to existing clients and allow Pacific WebWorks the
ability to upgrade those clients into the rest of our software tools.

      In first quarter 2001, IntelliPay expects to release two new products
for it's payment system one of which is SmartPages, that allows IntelliPay
business customers to host their secure web interface with IntelliPay while
still retaining complete control over the look and feel of their payment web
pages.  The other new product release is a new duplicate payment request
detection and management system enabling online businesses to configure the
detection of and management of duplicate transaction requests from their
ecommerce web site. Duplicate transaction requests can be the result of an
online shopper mistakenly submitting the same purchase twice, but it can also
be a source of online fraud attempts in some cases.  The engineering and
development of both of these new features has been completed and beta tested.

      In 2000 we spent $1,044,842 for research and development for completion
of our V4 version of Visual WebTools(TM).   In 1999, we recorded $320,479 for
engineering costs, including research and development expenses.  During 1998
we used $11,949 for engineering costs, including research and development
expenses.

Material Contracts

      We are a party to the following material contracts:

      In January 1998, we entered into an agreement with Electric Lightwave,
Inc. for telecommunications, facilities, and Internet access.  We formalized
the agreement in February 1998 and currently pay $2,200 per month for this
service.  The contract is scheduled to expire December 31, 2001.  We believe
that we will be able to extend this contract on terms, which are acceptable to
us, but have no assurances that we can do so.  However, we believe that we
will be able to enter a new contract with a different service provider if the
contract is not extended.

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      In February of 1999, we entered into an agreement with U.S. Merchant
Systems, Inc. located in Newark, California.  U.S. Merchant Systems, Inc.
provides merchant accounts to our clients.  We integrated a merchant account
and transaction processing which allows purchasers of Visual WebTools(TM) to
accept all major credit cards and personal checks at point of sale from their
web sites.  The term of this agreement is one year from the date of execution
and shall automatically renew each successive year thereafter, unless canceled
in writing.

Trademark, Licenses and Intellectual Property

       On October 9, 1998, Utah WebWorks filed a trademark application for
Visual WebTools(TM) which we acquired and became responsible for upon our
merger with Utah WebWorks.  In December of 1998 the United States Patent and
Trademark Office assigned Serial No. 567,136 to this mark.  The trademark is
currently pending.  In 1999, we filed a Trademark application for
MainStreetSquare.com(TM), Cyberhaggle(TM), and Pricehunter(TM), all features
of the online mall. Likewise, in 1999 we filed for trademarks on Pacific
WebWorks(TM), ClipOn Commerce(TM), FreeSiteNow(TM), V4(TM), Overnet
Express(TM) and IDDS(TM).  We did not file any trademark applications during
fiscal year 2000.

      Our success will depend, in part, on our ability to obtain and protect
our trademark and trade secrets and operate without infringing upon the
proprietary rights of others in the United States and other countries.  If we
were to become involved in a dispute regarding our intellectual property, it
could become necessary for us to participate in interference proceedings
before the United States Patent and Trademark Office to determine whether we
have a valid claim to the rights involved.  We could also be forced to seek a
judicial determination concerning the rights in question.  These proceedings
could be costly and time consuming, even if we were to eventually prevail.
Should we not prevail, we could be forced to pay significant damages, obtain a
license to the technology in question, or stop marketing one or more of our
products.

      All of our core technology was developed internally by our engineers and
by the engineers of Utah WebWorks.  The performance of our products does not
primarily rely on any third party technology, although we continue to support
as many third party technologies as possible.

      We also rely upon trade secrets, proprietary know-how, and
confidentiality provisions in agreements with employees, consultants, and
resellers to protect our intellectual property rights.  There are risks that
these other parties may not comply with the terms of their agreements with us,
and that we may not be able to adequately enforce our rights against these
parties.

      We have adopted a policy of requiring our employees and resellers to
execute confidentiality agreements when they commence employment with us or
resell our products.  These agreements generally provide that all confidential
information developed or made known to the employees or resellers during the
course of their relationships with us is to be kept confidential and not
disclosed to third parties, except under certain specific circumstances.  In
the case of employees, the agreements also provide that all inventions
conceived by the employees in the course of their employment will be our
exclusive property.

Employees

      We currently have approximately 33 employees.  There are approximately
29 employees in our Salt Lake City, Utah offices, approximately 10 of which
support the operations of all subsidiaries, and four in our Fremont,
California offices.  Of these employees, approximately three are employed on a
part-time basis.  Our employees are not presently covered by any collective
bargaining agreement.  We believe that our relations with our employees are
good, and we have not experienced any work stoppages.

Reports to Security Holders

      We are required to comply with the reporting requirements of the
Securities Exchange Act of 1934 ( the "Exchange Act") and file annual,
quarterly, and other reports with the SEC.  We are also subject to the proxy

                                      10

solicitation requirements of the Exchange Act and, accordingly, furnish an
annual report with audited financial statements to our stockholders.  We
currently use an investor relations firm, Columbia Financial Group, and
interested persons may call at (888) 301-6271.  Also, interested persons may
visit our web site at http://www.pacificwebworks.com.


                             ITEM 2.  PROPERTIES

      We moved into new corporate offices in late September 2000.  The new
corporate office is 26,200 square feet of office and common space in a
commercial development located in Salt Lake City, Utah and serves as our main
office and production facility.  The property includes a 3,200 square foot
training facility, a 3,000 square foot data center, and a microwave tower and
two T1 lines for bandwidth redundancy.  We believe this property will be
adequate for our future needs.  The lease agreement requires a monthly lease
payment of approximately $26,200 for a term of one year with an automatic
renewal for up to five years.  Either party may terminate the lease within 30
days of yearly expiration.

      We currently are obligated under the lease for our former corporate
offices located in the Westgate Business Center in Salt Lake City, Utah.  We
are currently attempting to negotiate a release from or termination of that
lease.  Under the lease we are required to pay $5,800 each month for 5,700
square feet of commercial office space.  This lease expires on December 31,
2001.


                          ITEM 3.  LEGAL PROCEEDINGS

      We are not aware that we are a party to any existing or threatened legal
or administrative proceedings as of the date of this filing.


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

      We have not submitted a matter to a vote of our shareholders during the
fourth quarter of the 2000 fiscal year.


                                   PART II

      ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

a) Market Information

      Our common stock is traded on the NASD OTC Bulletin Board under the
symbol "PWEB".  There was no trading activity in our common stock prior to the
first quarter of 1999.  The following table presents the range of the high and
low bid prices of our stock as reported by the Nasdaq Trading and Market
Services.  Such quotations represent prices between dealers and may not
include retail markups, markdowns, or commissions and may not necessarily
represent actual transactions.

      Year            Quarter Ended            High Bid      Low Bid
      ----            -------------            --------      -------
      1999            March 31                 $15.50        $  6.875
                      June 30                    9.41            5.00
                      September 30               6.38            3.81
                      December 31                4.94            1.25

      2000            March 31                 $ 6.13        $   2.31
                      June 30                    4.75            2.13
                      September 30               3.50            1.63
                      December 31                3.34            0.59


                                      11
<PAGE>

      On March 12 2001 our common stock was listed on the Berlin Exchange
under the symbol "PWB".  The Berlin Exchange lists more than 10,000 companies
from 60 different countries.

      As of March 8, 2001 we have approximately 245 stockholders of record.

      We have not paid cash or stock dividends and have no present plan to pay
any dividends, intending instead to reinvest our earnings, if any.  For the
foreseeable future, we expect to retain any earnings to finance the operation
and expansion of our business. In addition, it is anticipated that the terms
of future debt and/or equity financing may restrict the payment of cash
dividends. Therefore, the payment of any cash dividends on the common stock is
unlikely. However, payment of future dividends will be determined from time to
time by our board of directors, based upon our future earnings, financial
condition, capital requirements and other factors. We are not presently
subject to any restriction on our present or future ability to pay any
dividends.

b) Recent Sales of Unregistered Securities

      The following discussion describes all securities sold by Pacific
WebWorks without registration during the fourth quarter of 2000 and as of a
recent date:

      During January 2001 we issued an aggregate of 537,200 common shares
valued at $268,600 to Principal Property Management LLC in consideration for a
security deposit and monthly rent for our corporate office lease.  We relied
on an exemption from registration under the Securities Act provided by Section
4(2) as a private transaction not involving a public distribution.


                       ITEM 6.  SELECTED FINANCIAL DATA

      The financial information set forth below with respect to our statements
of operations for each of the four years ended December 31, 2000, 1999, 1998
and 1997 and with respect to our balance sheets at December 31, 2000, 1999,
1998 and 1997 is derived from financial statements that have been audited by
our independent certified public accountants, and is qualified by reference to
their reports and notes related thereto.  Our accounting predecessor, Utah
WebWorks, Inc., had an inception date of April 10, 1997 and Utah WebWorks
merged with Pacific WebWorks (then Asphalt Associates, Inc.) on January 11,
1999. The 2000 fiscal year includes consolidation of our wholly owned
subsidiary, IntelliPay, and includes the consolidation of our former 51%
interest in World Commerce. The following selected financial data should be
read in conjunction with our financial statements and notes attached to this
report and the "Management's Discussion and Analysis of Financial Condition
and Results of Operations," below.


Statement of Operations Data           Year ended December 31,
----------------------------           -----------------------
                               2000        1999          1998         1997
                           ------------ ------------ ------------ ------------
Net Revenues:              $ 4,954,384  $   305,628  $   172,395  $    94,014
Cost of sales                  811,506       42,874      188,974      107,332
                           ------------ ------------ ------------ ------------
Gross profit (loss)          4,142,878      262,754      (16,579)     (13,318)
                           ------------ ------------ ------------ ------------
Operating expenses:
 Selling expenses            4,802,397      406,917       30,180       13,987
 Research and development    1,044,842      320,479       11,949        5,523
 General and administrative  2,375,252      786,740       67,845       36,179
 Depreciation and
  amortization               1,095,261       30,572       13,151            -
Compensation expense for
  options and warrants          28,366    1,242,584            -            -
                           ------------ ------------ ------------ ------------

<PAGE> 12


   Total operating expenses  9,346,118    2,787,292      123,125       55,689
                           ------------ ------------ ------------ ------------
   Loss from operations     (5,203,240)  (2,524,538)    (139,704)     (69,007)
                           ------------ ------------ ------------ ------------
Other income and (expenses)
 Interest expense              (70,440)     (19,243)     (10,761)      (3,500)
 Interest income                13,989        1,246            -        3,755
 Loss on investment                  -      (25,000)           -            -
                           ------------ ------------ ------------ ------------
                               (56,451)     (42,997)     (10,761)         255
                           ------------ ------------ ------------ ------------

    Net Loss               $(5,259,691) $(2,567,535) $  (150,465) $   (68,752)
                           ============ ============ ============ ============
Net loss per-share basic
 and diluted               $     (0.40) $     (0.27) $     (0.03) $     (0.01)
                           ============ ============ ============ ============
Shares used in computing
  per share amounts         13,140,360    9,652,500    5,000,000    5,000,000
                           ============ ============ ============ ============



                                              December 31,
                                            ---------------
Balance sheet data             2000        1999          1998         1997
-------------------        ------------ ------------ ------------ ------------
 Cash and cash equivalents $   163,801  $   153,989  $     9,306  $     5,440
 Total assets                5,405,022      630,559       55,970       61,092
 Total current liabilities   3,282,184      644,727      265,187            -
 Accumulated deficit        (8,046,443)  (2,786,752)    (219,217)     (68,752)
 Stockholders' equity
   (deficit)                 2,122,168      (14,168)    (209,217)     (58,752)


See notes to Financial Statements for information concerning the computation
of per share amounts.


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

      Overview  Beginning in the second quarter of 2000, and throughout the
remainder of the year, management took several steps to restructure our
operations with the intent to generate profits.  These steps included
integration of the operations of Pacific WebWorks and its related companies,
reduction in the number of employees, and continued development of our sales
and marketing channels.  Cash from our current sales channels is insufficient
to support our existing operations, however, management believes that the
sales channels currently we are developing will be sufficient to support our
existing operations in the near term. Sales projections may remain down
throughout early fiscal year 2001 due to the alteration of our short-term
goals and our overall sales and marketing strategy.

      Acquisitions.  We acquired IntelliPay in an arms length transaction
through a stock-for-stock exchange in which Pacific WebWorks issued 2,400,000
common shares, valued at $4,320,000, in exchange for 1,000 shares of
IntelliPay.  The acquisition was accounted for under the purchase method of
accounting.  Accordingly, IntelliPay's results of operation have been included
with Pacific WebWorks from the closing date in April 2000 and its consolidated
assets and liabilities have been recorded at their fair values on the same
date.

      Pacific WebWorks and U.S. Merchant Systems, Inc. formed World Commerce
in December of 1999 as a joint venture.  Originally, we held a 50% interest in
World Commerce, which was held on the equity method of accounting.  In March
2000 we acquired an additional 1% interest in World Commerce for 4,663 shares
of Pacific WebWorks common stock totaling $9,180, which gave us a 51% total
interest.  In the third quarter of 2000, we determined that we would acquire
the remaining 49% of World Commerce.  We agreed with our partner, U.S.
Merchant Systems, to complete our scheduled seminars and then we would assume
the outstanding ownership of World Commerce held by US Merchant Systems and
continue forward with World Commerce operations.  As a result we acquired the
remaining 49% interest for $100 in August 2000.  The operations of World
Commerce are consolidated with our financials statements as a wholly owned
subsidiary of Pacific WebWorks.

                                      13
<PAGE>


      We acquired Logio in an arms length transaction by issuing approximately
2.8 million shares of our common stock for 18,425,830 shares of Logio common
stock.  This transaction was valued at approximately $2,282,000. The
acquisition was accounted for under the purchase method of accounting using
generally accepted accounting principles.  Logio's results of operation are
included with ours from the closing date  and its consolidated assets and
liabilities are recorded at their fair values at the same date.

Results of Operations.

      The following discussions are based on consolidated financial statements
of Pacific WebWorks and its wholly owned subsidiaries IntelliPay and World
Commerce.

      We have sustained losses from operations for the last four fiscal years
and our ability to continue as a going concern is dependent upon our ability
to increase our revenues, reduce our monthly expenses or obtain additional
financing.

      We receive revenues from the sale of access to our software technology
and continuing monthly service and hosting fees.  Additionally, we derive
revenues for services provided related to web site design, training, education
and consulting.   Revenues are recognized when persuasive evidence of an
agreement exists, delivery has occurred and services have been rendered, the
price is fixed or determined and collectability is reasonably assured.
Up-front fees are non-refundable and are deferred and recognized
systematically over the period the product is delivered and services are
performed, which is generally one year.  Monthly fees for our services are
recognized as services are performed.  Cost of sales includes costs of
merchant accounts, shipping and fulfillment costs, and other third party
products and services.

      Operating expenses include general and administrative, which consists of
all finance and administrative salaries and benefits, rental of office space,
professional fees, and other general office expenses.  Selling expenses
include both sales and marketing expenses including department salaries and
benefits, advertising, seminar costs, and commissions paid to resellers.
Research and development consists primarily of personnel expenses related to
product design, programming, and quality control.  Operating expenses also
include the depreciation of property and equipment, amortization of goodwill
and other assets, and expenses related to stock options and warrants earned by
employees, directors and consultants.

      Comparison of 2000 and 1999 Year End Periods.  Following is a comparison
of our operating results for the year ended December 31, 2000 with the year
ended December 31,1999:

      Net Revenues:  Pacific WebWorks generated $4,954,384 in net revenues, an
increase of $4,648,756, as compared to $305,628 for 1999.  A total of 70.7% of
the net revenues were raised from seminar related activities during fiscal
2000.  However, the seminars were abandoned due to the significant costs
involved in running several seminar teams and the cash flow concerns related
to the seminar marketing operations.  A total of 16.8% of the net revenues
were related to IntelliPay monthly gateway service fees and set-up fees on
ePayment Systems and 12.4% were related to product sales and licensing fees
for our software technology and from web site design services and training.

      General and Administrative Expense:  General and administrative expenses
increased $1,588,512 from 1999 to 2000.  The increase is primarily due to our
growth in 2000 and the resulting increases in finance and administrative
employees, telephone expenses, bank and merchant discount fees, insurance
costs and the renting of the new data center, approximating $30,000 per month
beginning in October of 2000.

      Selling Expenses:   Our selling expenses increased $4,395,480 in 2000
compared to 1999.  These expenses related primarily to seminar related
activities, including outsourced seminar presentation talent, postage and
printing of mailers, travel, trade shows, meeting room facilities, and
internal sales employees.

      Research and Development Expenses:  Research and development expenses
increased $724,363 in 2000

                                      14
<PAGE>

from 1999.  The increase was primarily due our research and development
efforts and completion of IntelliPay's ePayment System and related products.
These expenses are primarily comprised of employee related charges for up to
thirteen engineering personnel and consulting services related to development.

      Total Operating Expenses:  The $6,558,828 increase in total consolidated
operating expenses from 1999 to 2000 was due primarily to our seminar related
activities and the development of our software tools and ePayment product.  We
completed development of our core products in 2000 and continually work to
improve and maintain them.  In second quarter 2000, we shifted our sales and
marketing model from seminar presentations to strategic business development
and reseller distribution channels.  This shift caused a reduction in selling
expenses in late 2000.

      Compensation expense for options and warrants for Consulting Services.
We grant options from time to time as approved by the board of directors.  We
granted options to employees in September 2000 and the strike price of these
options was less than the fair value on the date of grant, creating intrinsic
value.  We are recognizing the expense of these options over the one-year
vesting period and have recorded $15,150 during 2000.

      We issued warrants to purchase 400,000 common shares to our investors
relations firm for services during 1999.  The warrants were exercisable over a
period of time and we recognized the $1,255,800 value of the warrants,
determined on the Black-Scholes model, over the period earned.  We recorded
$13,216 in 2000 and $1,242,584 in 1999.

      Net Loss.  Our consolidated net loss for 2000 was $5,259,691 compared to
a net loss of $2,567,535 for 1999, an increase of $2,692,156.  The net loss
increase in 2000 was primarily due to increased operating expenses, related to
seminar sales activity, and increases in employees and administrative costs,
and research and development efforts.

      Comparison of 1999 and 1998 Year End Periods.  Following is a comparison
of our operating results for the year ended December 31, 1999 with the year
ended December 31, 1998:

      Revenues.  We generated $305,628 in revenues from product sales and
licensing fees for our software technology during fiscal 1999 compared to
$172,395 for 1998.  The increase was primarily attributable to the development
of sales of our software technology by us or through our resellers.

      General and Administrative Expenses.  These costs increased $718,895
from 1998 compared to 1999.  The increase is primarily due to the growth in
the number of administrative employees and general office expenses.

      Sales Expenses.  Sales expenses increased $376,737 from 1998 compared to
1999.  Sales expenses for 1999 increased over the previous years due to the
development of an inside sales force, which included experienced Internet
sales people and equipment such as a predictive dialer.

      Research and Development Expenses.  Research and development expenses
recorded an increase of $308,530 from 1998 to 1999.  The increase was
primarily due to continued development of our software technologies and
addition of development employees.

      Total Operating Expenses. The $2,664,167 increase in total operating
expenses from 1998 to 1999 was due to the change in the nature of our
operations from selling services to selling software products.  Our expenses
increased primarily due to the expense related to execution of our new
development plan.

      Warrants for Consulting Services.  We issued warrants to purchase
400,000 common shares to our investors relations firm for services during
1999.  The warrants were exercisable over a period of time and we amortized
the $1,242,584 value of the warrants, determined on the Black-Scholes model,
for the 1999 period.

      Net Loss.  Our net loss for 1999 was $2,567,535 compared to a net loss
of $150,465 for 1998.  The net loss

                                      15
<PAGE>

increase of $2,417,070 in 1999 was primarily due to increased operating
expenses related to research and development efforts, improvement of sales
channels, and the amortized expense for the warrants issued for services.

      Comparison of 1998 and 1997 Year End Periods.  Following is a comparison
of our operating results for the year ended December 31, 1998 with the year
ended December 31, 1997:

      Revenues.  We generated $172,395 in revenues from product sales and
licensing fees for our software technology during fiscal 1998 compared to
$94,014 from engineering services for 1997.  The increase in revenues of
$78,381 was a result of shifting our business operations from engineering
services to Internet software applications.

      General and administrative expenses.  These costs increased $31,666 from
1997 compared to 1998.  The increase was primarily due to increases in general
office expenses.

      Sales expenses.  Sales expenses increased $16,193 from 1997 compared to
1998.  The increase was primarily due to promotions, including printing of
material related to professional services.

      Research and Development.  These expenses increased $6,426 from 1997
compared to 1998.  The increase was primarily due to the addition of new
development personnel.

      Total operating expenses. Total operating expenses were 59.2% of
revenues in 1997 compared to 71.4% of revenues in 1998.  These expenses
increased as a result of the major changes in the nature of our business
operations.

      Net Loss.  We recorded a net loss of $68,752 for 1997 and a net loss of
$150,465 for 1998.  The increase in the net loss was a result of the operating
expenses associated with our growth and shift in business operations.

Liquidity and Capital Resources.

      At December 31, 2000, we had $163,801 cash on hand with total current
assets of $698,784 compared to $153,898 cash on hand and total current assets
of $449,084 at December 31, 1999.  Total current liabilities were $3,282,184
at December 31, 2000 compared to $644,727 at December 31, 1999.  Deferred
revenue of $1,811,020  represents the majority of the total current
liabilities and has been deferred in accordance with SAB101 and recognized on
a ratable basis over the period the service revenues are earned.  As of
December 31, 2000, our accumulated deficit totaled $8,046,443 and we had
negative working capital totaling $2,583,400 in 2000 and $195,643 in 1999.

      Net cash used for operating activities for the year ended December 31,
2000 was $2,100,149.  Net cash used in investing activities was $252,655,
which was primarily used for the purchase of capital equipment.  Net cash
provided by financing activities was $2,362,707 from both the issuance of
common stock and debt financing.

      During fiscal year 2000 we entered into agreements with the holders of a
majority of our debt to convert those debts into equity.  In June 2000 we
converted notes payable with interest of $2,037,536 into 1,440,000 common
shares of which 400,000 common shares were converted for $1,000,000 along with
warrants for the purchase of an additional 600,000 common shares at strike
prices ranging from $5.00 to $7.50 per share.  Then in September 2000 we
converted a $600,000 note payable to 600,000 common shares. We also issued
18,000 shares valued at approximately $26,000 for director and officers'
liability insurance in August 2000.

      In January 1999 we issued warrants to Columbia Financial Group to
purchase 400,000 shares of our common stock at an aggregate exercise price of
$1,475,000 in exchange for their services to us.  We entered into a
registration rights agreement with Columbia Financial in February of 2000 and
have registered the shares to be issued upon exercise of these warrants when,
and if, Columbia Financial decides to exercise the warrants.  As of the date
of this filing, 150,000 warrants at a strike price of $2.50 were exercised
during the fourth quarter of 2000.

                                      16
<PAGE>

      We may receive additional proceeds from the future exercise of the
warrants we have issued.  However, the holders of the warrants have total
discretion whether or not to exercise the warrants.  We cannot assure that all
of the warrants will be exercised before their expiration in 2004 and 2005.
If all our outstanding warrants are exercised we would realize $4,975,000 in
proceeds.

      During the fourth quarter 2000, as a result of our marketing and sales
strategies shifting away from costly seminars to business development, our
monthly cash inflow has decreased substantially. Our monthly cash outflows
have also resulted in a similar decrease during the fourth quarter.  We
continue to fund our operations with borrowings and the sale of unregistered
stock where cash flows fall short of requirements.  While we have taken steps
to reduce our monthly burn rate and move to become cash flow positive, we
believe will need an additional $2.5 million to 5 million in 2001 to continue
to keep up with technological improvements and further our business
development strategies during the next twelve months.  We operate in a very
competitive industry in which large amounts of capital are required in order
to continually develop and promote products.  Many of our competitors have
significantly greater capital resources than we do.  We believe we will need
to continue to raise additional capital, both internally and externally, in
order to successfully compete.

      While we may be able to fund a portion of our operations through our
revenues for the short term, we currently anticipate using private placements
of our common stock to fund operations over time.  We intend to issue such
stock pursuant to exemptions from the registration requirements provided by
federal and state securities laws.  The purchasers and manner of issuance will
be determined according to our financial needs and the available exemptions.
We also note that if we issue more shares of our common stock our stockholders
may experience dilution in the value per share of their common stock.

Risk Factors Affecting Future Performance

      We will need additional capital and may be unable to raise it.  We
believe, based on our current expenditure rate, that we will need $2.5 million
additional financing by the summer of 2001.  Therefore, our success will
depend upon our ability to access equity capital markets and borrow on terms
that are financially advantageous to us.  We may not be able to obtain
additional funds on acceptable terms.  If we fail to obtain funds on
acceptable terms, we might be forced to delay or abandon some or all of our
business plans, which could have a material adverse effect on us.  If we are
unable to obtain additional capital, we may not have sufficient working
capital to develop products, finance acquisitions, pursue business
opportunities, or meet reporting requirements.  If we borrow funds, we could
be forced to use a large portion of our cash reserves to repay principal and
interest on those funds.  If we issue our securities for capital, the
interests of investors and shareholders could be diluted.

      Our services and products may become outdated, or may require large
investments to remain viable.  Web site technology and the electronic payments
area are evolving rapidly and new technologies, products and methods are
developing at an increasing rate.  Wide scale implementation of a new
technology or payment method, such as stored-value cards, electronic cash
equivalents or wireless communications, could force us to modify our payment
services or software to remain competitive, and could potentially render one
or more of our services or products obsolete.  The cost of any adaptations or
the loss of revenue from a displaced service or product would have a material
adverse effect on us.  We are continuing to develop new products and services
that we hope will ensure the continued usage of our products and services in
the future.  However, no one can predict what new technologies and payment
methods may evolve in the future, or whether our current products or systems
will be compatible.

      Our profitability is substantially dependent on continued expansion of
the Internet, which is uncertain.  A substantial portion of our services and
products require connectivity through the Internet.  Although online usage has
expanded rapidly in recent years, the Internet is still immature and is
evolving rapidly.  Critical issues concerning the Internet such as security,
reliability, cost, ease of use and quality of service, remain
unresolved and may limit the growth of electronic commerce.  Delays in the
deployment of improvements to the infrastructure for Internet access,
including:

 .    higher speed modems and other access devices,

                                      17
<PAGE>
 .    adequate capacity, and
 .    a reliable network backbone
also could hinder the development of the Internet as a viable commercial
marketplace.  For all of these reasons, it remains uncertain whether commerce
over the Internet will continue to grow, whether a significant market for our
products and services will grow or whether our products and services will
become generally adopted.  Even if such a market does develop, competitive
pressures may make it difficult, or impossible, for us to operate profitably.

      The nature of our business makes it difficult to predict our revenues
and operating results, which may negatively affect our stock price.  We
currently are unable to finance our operations through our generated revenues.
Our revenues and operating results have varied significantly from period to
period.  Although our earnings are becoming more predictable as the market for
our services and products begins to mature, our revenues and operating results
can be expected to fluctuate somewhat for a variety of reasons beyond our
control:
 .   The burgeoning e-commerce phenomenon is relatively new and rapidly
     evolving.
 .   No reliable data exists upon which to budget for growth and seasonality,
     making planning very difficult.
 .   We are dependent for our planning purposes on sales and other information
     provided by a large number of intermediary "resellers," many of whom
     account for transactions sporadically.
 .   Many of our distribution channels integrate our services with other
     electronic commerce solutions.  The timing for these channels to complete
     the integration and deploy their solutions into their distribution
     channel is unpredictable.
 .   Our revenues may be adversely affected by new products and technologies
     launched by our competitors.
     For these reasons, period-to-period comparisons of our results of
operations are not necessarily a reliable indication of future performance.
Because of all of the foregoing factors, it is possible that our quarterly
operating results from time to time will be below the expectations of public
market analysts and investors.  In that case, we expect that the price of our
common stock would be materially and adversely affected.

      We face intense competition that may slow our growth and force our
prices down.  We compete with a number of companies in our web site building
market, our Internet payment services and payment software businesses.  We
expect this competition to intensify in the future, with new competitors, and
competitive services and products regularly entering the market.  Many of
these current and potential competitors have longer operating histories,
greater name recognition, larger installed customer bases and significantly
greater financial, technical and marketing resources.  In addition, many of
our current or potential competitors, such as Microsoft, have broad
distribution channels that they may use to bundle competing products directly
to end-users or purchasers.  If these competitors were to bundle competing
products for their customers, it could adversely affect our ability to market
our services.

      This competitive environment will make it increasingly difficult for us
to increase our market share and may force us to reduce the prices for some of
our services and products.  Unless we can increase our volume or reduce our
costs, any such reductions would have an adverse effect our on our
profitability.

      We must achieve market acceptance and develop new products and services
to address technological change.  Broad acceptance of our products and
services and their use in large numbers is critical to our success because a
large portion of our revenues derive from one-time fees we charge to customers
buying our products and services.  In addition, our ability to earn
significant revenues from our Visual WebTools(TM) or IntelliPay transaction
gateway will depend in part on their acceptance by a substantial number of
prominent online businesses.  One obstacle to widespread market acceptance for
IntelliPay transaction gateway is that widely adopted technological standards
for accepting and processing payments over the Internet have not yet emerged.
As a result, merchants and financial institutions have been slow to select
which service to use.  Until one or more dominant standards emerge, we must
design, develop, test, introduce and support new services to meet changing
customer needs and respond to other technological developments.  To be
successful, we must obtain widespread acceptance of our technologies, or
modify our products and services to meet whatever industry standards do
ultimately develop.  It is not certain that we will be able to do either.

      We may experience software defects and development delays, damaging
customer relations.  Services based on sophisticated software and computing
systems often encounter development delays and the

                                      18
<PAGE>

underlying software may contain undetected errors or failures when introduced
or when the volume of services provided increases.  We may experience delays
in the development of our software products or the software and computing
systems underlying our services.  In addition, despite rigorous testing our
software may nevertheless contain errors.  Any material development delays or
errors could damage the reputation of the service or software effected, as
well as our customer relations, which could have a material adverse effect on
our business.  We have detected errors, defects, and bugs in the past and have
corrected them as quickly as possible. Correcting any defects or bugs we may
discover in the future may require us to make significant expenditures of
capital and other resources.  We believe that we follow industry-standard
practices relating to the identification and resolution of errors, defects, or
bugs encountered in the development of new software and in the enhancement of
existing features in our products.  As of this date we have not experienced
any material adverse effect by reason of an error, defect, or bug.

      We may experience breakdowns in our hosting services, infrastructure or
payment processing system, harming our business.  We would be unable to
deliver our payment processing services or hosting services if our system
infrastructures break down or are otherwise interrupted.  Events that could
cause system interruptions are:
      .  fire,
      .  earthquake,
      .  power loss,
      .  telecommunications failure, and
      .  unauthorized entry or other events.
     We maintain redundant systems within our operations center designed to
prevent data loss or other disruption as a result of an internal system
failure.  Our operating centers are located in secured, climate controlled
areas, including high security, redundant power backups, seismic
reinforcements, redundant fire suppression facilities, redundant Internet
access and 24 hour security monitors.  These measures will not necessarily
ensure the continued, uninterrupted operation of our processing capabilities
in the event of a regional natural disaster, power outage, communications
interruption, or other catastrophic event.  Also, we have experienced growing
transaction volumes that have from time to time stressed the capacity of our
systems.  There is a possibility that our existing systems may be inadequate
and cause serious failures of our services.  Finally, although we regularly
back up data from operations, and take other measures to protect against loss
of data, there is still some risk of such losses.  A system outage or data
loss could materially and adversely affect our business.

      Despite the security measures we maintain, our infrastructure may be
vulnerable to computer viruses, hackers, rouge employees or similar sources of
disruption.  Any damage or failure that causes interruptions in our operations
could have a material adverse effect on our business.  Any problem of this
nature could result in significant liability to customers or financial
institutions and also may deter potential customers from using our services.
We attempt to limit this sort of liability through back-up systems,
contractual provisions, insurance, and other security measures.  However, we
cannot assure you that these contractual limitations on liability would be
enforceable, or that our insurance coverage would be adequate to cover any
liabilities we did sustain.

      Breach of our e-commerce security measures could reduce demand for our
services.  The e-commerce industry is intensely focused on the need for
Internet security, particularly with respect to the transmission and storage
of confidential personal and financial data.  Our competitive position is
largely dependent upon our existing and potential customers' confidence in our
ability to safeguard the data that we process.  IntelliPay relies on public
key cryptography, an encryption method that utilizes two keys, a public and a
private key, for encoding and decoding data, and digital certificate
technology, or identity verification, to provide the security and
authentication necessary for secure transmission of confidential information.
Regulatory and export restrictions may prohibit us from using the strongest
and most secure cryptographic protection available and thereby expose us to a
risk of data interceptions.  Although at this time our security measures are
sufficient and continually reviewed, a party who is able to circumvent our
safeguards could misappropriate proprietary information or interrupt our
operations.  Any compromise or elimination of our security could erode
customer confidence in our systems and could result in lower demand for our
services.

      We anticipate the ongoing need to expend significant capital and other
resources to address security issues and safeguard the confidentiality of our
customers' data.  Concerns over the security of the Internet and other online
transactions and the privacy of users may also inhibit the growth of the
Internet and other online services generally,

                                      19
<PAGE>

and the Web in particular, especially as a means of conducting commercial
transactions.

      Our results may suffer if we are unable to attract and maintain
qualified management and technical personnel.  Our performance is
substantially dependent on the performance of our executive officers and key
employees.  We depend on our ability to retain and motivate high quality
personnel, especially our management and highly skilled development teams.
Should we lose the services of one or more of these persons, their loss could
have a material adverse effect on our operations.  Our future successes also
depends on our continuing ability to identify, hire, train and retain other
highly qualified technical and managerial personnel.  Competition for these
employees is intense and increasing.  We may not be able to attract,
assimilate or retain qualified technical and managerial personnel in the
future, and the failure to do so would have a material adverse effect on our
business.

      We have a limited sales force, and rely on our distribution channels,
which are new and evolving.  We have only a limited number of sales and
marketing employees and, therefore, we rely heavily on distribution channels
for sales of our products and payment services.  Because of the rapidly
evolving nature of electronic commerce, we are not certain that the
distribution channels with which we are working will provide an adequate
distribution network for us to achieve our goals, or that we will be able to
develop alternative channels.

      We depend upon our proprietary rights, none of which can be completely
safeguarded against infringement.  Our ability to compete effectively will
depend, in part, upon our ability to protect our proprietary source code,
Visual WebTools(TM) and the IntelliPay transaction gateway through a
combination of licenses and trade secrets.  Competition in our market is
intense and our competitors may independently develop or obtain patents on
technologies that are substantially equivalent.

      Intellectual property rights, by their nature, are uncertain and involve
complex legal and factual questions. We may unknowingly infringe upon the
proprietary rights of others, thereby exposing us to significant liability
and/or damages.  We are not aware of any third party intellectual property
rights which would prevent us from marketing and developing our technologies,
although such rights may exist.  If we were to inadvertently infringe upon the
intellectual property of another party, we could be forced to seek a license
to those intellectual property rights, alter the products or processes so they
no longer infringe upon those rights, or engage in litigation.  If we were
required to attempt to obtain a license to another party's proprietary rights,
our efforts would be expensive, and might be unsuccessful.

      We also rely upon trade secrets with respect to our source code and
functionalities and other unpatented proprietary information in our product
development activities.  To the extent we rely upon confidential information
to maintain our competitive position, other parties may independently develop
the same or similar information.  We seek to protect trade secrets and
proprietary knowledge in part through confidentiality agreements with our
employees, resellers, and collaborators.  These agreements may not effectively
prevent disclosure of our confidential information and may not provide us with
an adequate remedy in the event of unauthorized disclosure of such
information.  If employees or collaborators develop products independently
that may be applicable to our products under development, disputes may arise
about ownership of proprietary rights to those products or services.
Protracted and costly litigation could be necessary to enforce and determine
the scope of our proprietary rights.  It would be impossible to predict
whether litigation might be successful.  Our failure to obtain trade secret
protection, for any reason, could have a material adverse effect on our
business, financial position and results of operations.

      We rely in part on third party technology licenses.  We also rely on
certain technology which we license from third parties, including software
which is integrated with internally developed software and used in our
software to perform key functions.  We cannot assure you that third party
technology licenses will continue to be available to us on commercially
reasonable terms or at all.  The loss of or our inability to maintain any of
these technology licenses could result in delays in introduction of our
services, which could have a material adverse effect on our business,
financial condition or operating results.

      We are subject to extensive government regulation, which may change and
harm our business.  Our operations are subject to various state and federal
regulations.  Because electronic commerce in general, and most of our products
and services in particular, are so new, the application of many of these
regulations is uncertain and difficult to interpret.  The agencies responsible
for the interpretation and enforcement of these regulations could

                                      20
<PAGE>

amend those regulations or issue new interpretations of existing regulations.
It is also possible that new legislation may be passed that imposes additional
burdens.  Any such change could lead to increased operating costs and could
also reduce the convenience and functionality of our products or services,
possibly resulting in reduced market acceptance.  It is possible that new laws
and regulations may be enacted with respect to the Internet, covering issues
such as user privacy, pricing, content, characteristics and quality of
products and services.  The adoption of any such laws or regulations may
decrease the growth of the Internet, which could in turn decrease the demand
for our products or services and increase our cost of doing business or could
result in additional engineering costs in order to comply with such
regulations or could otherwise have a material adverse effect on our business,
financial condition or operating results.

      We may pursue acquisitions of complementary service product lines,
technologies or business which may adversely affect our operations.  From time
to time, we evaluate potential acquisitions of businesses, services, products,
or technologies.  These acquisitions may result in a potentially dilutive
issuance of equity securities, the incurrence of debt and contingent
liabilities, and amortization of expenses related to goodwill and other
intangible assets.  In addition, acquisitions involve numerous risks,
including difficulties in the assimilation of the operations, technologies,
services, and products of the acquired companies, the diversion of
management's attention from other business concerns, risks of entering markets
in which we have no or limited direct prior experience and the potential loss
of key employees of the acquired company.  We have no present commitment or
agreement with respect to any material acquisition of other businesses,
services, products, or technologies.

      Our stock price is volatile.  The price of our common stock has been and
likely will continue to be subject to wide fluctuations in response to a
number of events and factors, such as:

 .     quarterly variations in operating results,
 .     variances of our quarterly results of operations from securities
      analyst estimates,
 .     announcements of technological innovations, new products, acquisitions,
      capital commitments or strategic alliances by us or our competitors,
 .     changes in financial estimates and recommendations by securities
      analysts,
 .     the operating and stock price performance of other companies that
      investors may deem comparable to us, and
 .     news reports relating to trends in our markets.

      In addition, the stock market in general, and the market prices for
Internet-related companies in particular, have experienced significant price
and volume fluctuations that often have been unrelated to the operating
performance of the companies affected by these fluctuations.  These broad
market fluctuations may adversely affect the market price of our common stock,
regardless of our operating performance.  Securities class action litigation
has often been instituted against companies that have experienced periods of
volatility in the market price for their securities.  If we were to become the
target of this kind of litigation, the cost in dollars and management
attention could be substantial, and the diversion of management's attention
and resources could have a material adverse affect on our business.

      The common stock we are committed to issue and may issue in the future
will increase the amount of our common stock on the public market, possibly
causing our stock price to decline.  As of March 2000, we had granted
warrants, and stock options to acquire an aggregate of 1,302,858 shares of our
common stock.  We granted these securities and entered into these commitments
in connection with acquiring technologies, raising capital in private
placement transactions, entering into strategic alliances and providing
incentives to employees, consultants and non-employee directors under our
stock option plans.  The sales in the public market of substantial amounts of
shares acquired upon exercise of the foregoing warrants and options, or the
prospect of such sales, could adversely affect the market price of our common
stock.

Recent Accounting Pronouncements

      During first quarter 2000, the Financial Accounting Standards Board
issued FIN 44, an Interpretation of APB Opinion 25 on accounting for employee
stock compensation. The statement provides clarification on, among other
things, the definition of an employee, on a fixed stock option or award and
variable accounting for stock

                                      21
<PAGE>

options and awards. FIN 44 was effective on July 1, 2000.  We believe that the
impact of the adoption of this Interpretation will not have a significant
effect on our financial statements.

      The SEC staff issued SAB 101, "Revenue Recognition in Financial
Statements," in December 1999. The SAB provides registrants with the staff's
positions on revenue recognition requirements and related disclosures under
generally accepted accounting principles. SAB 101 was to be effective no later
than the second fiscal quarter of the fiscal year beginning after December 15,
1999.  SAB 101 has since been amended and is effective no later than the
fourth fiscal quarter of the fiscal year beginning after December 31, 1999.
Pacific WebWorks, Inc. and subsidiaries adopted SAB 101 in October 2000 and
that this statement has been reflected in its financial statements.


      ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

      Not applicable.


             ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

      Reference is made to the financial statements for the years ended
December 31, 2000, 1999 and 1998 attached to this Form 10-K report.


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

      As previously reported, Chisholm & Associates, CPA's, replaced Crouch,
Bierwolf & Chisholm, C.P.A.s, as our independent auditor on August 3, 2000.



                                   PART III

      ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF PACIFIC WEBWORKS

a) Directors and Officers

      The directors and executive officers and key employees of Pacific
WebWorks corporation are listed below.  Their respective ages and positions
are listed, as well as, biographical information for each of these persons is
presented below.  Our articles of incorporation provide for a board of
directors consisting of at least three, but no more than nine persons.  Our
directors serve until our next annual meeting or until each is succeeded by a
qualified director. Our executive officers are chosen by our board of
directors and serve at its discretion.  There are no family relationships
between or among any of our directors, executive officers, and key employees.


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

Christian R. Larsen             26            President and Director
Kenneth W. Bell                 50            Chief Executive Officer and
                                              Director
Thomas R. Eldredge              32            Secretary/Treasurer, Chief
                                              Financial Officer
Allan E. Oepping                25            Director, Vice President of
                                              Engineering
Benjamin A. Black               28            Director
Tom J. Hill                     48            Director

      Christian R. Larsen: Mr. Larsen serves as President and a director of
Pacific WebWorks, Inc. and has done so since April 1999.  From April 1999
through January 2001 he served as our Chief Executive Officer.  For the two

                                      22
<PAGE>

years prior to April 1999, he served as Chief Operating Officer for Pacific
WebWorks, Inc. and as a consultant for Utah WebWorks.  In July 1993, he
started Innovative Research and Animated Design, Inc. ("IRAD") which developed
custom and commercial software for animation and special effects.  He served
as President of IRAD from October 1993 until  February 1997.  IRAD grew to a
Company employing 28 individuals. He has seven years experience providing
computer consulting and business management services.  Mr. Larsen filed a
Chapter 7 voluntary bankruptcy petition in May of 1997 in the District of Utah
Central Division of the United States Bankruptcy Court, which was discharged
in September of 1997.

      Kenneth W. Bell: Mr. Bell was appointed as our Chief Executive Officer
and interim Director on January 5, 2001.  He is President and a Director of
Logio, Inc. and has served in various offices for Logio since February 1997.
From April 1990 and December 1996, he served as President and Chief Financial
Officer of Kelmarc Corporation, a financial and management advisory company.
He has twenty-five years experience in a variety of finance and management
positions, including employment in the commercial banking area for fifteen
years in Utah and California. Mr. Bell received his B.S. from BYU in 1972.

      Thomas R. Eldredge: On January 5, 2001 our Board of Directors appointed
Mr. Eldredge as our Secretary/Treasurer and Chief Financial Officer.  He is
Secretary/Treasurer and an interim director for Logio, Inc. and has served in
several offices for Logio since April 2000. Mr. Eldredge is a CPA and has over
ten years of experience in accounting, audit and information technology. He
spent over six years with Grant Thornton LLP, one of the nation's ten largest
public accounting firms. Most recently he was a manager in the assurance
department at Grant Thornton. Mr. Eldredge is an adjunct professor at the
University of Utah in the accounting and information technology departments at
the graduate and undergraduate levels and has instructed students for over
four years at the University, Grant Thornton's National training center and
Utah Valley State College. He received both his Bachelor of Science and Master
of Professional Accountancy from the University of Utah. Mr. Eldredge is
currently the President of the Utah Association of Certified Public
Accountants'   Southern Chapter. In February 2001, our Board of Directors
appointed Mr. Eldredge as Corporate Secretary.

      Allan E. Oepping: Mr. Oepping serves as a Director and as Pacific
WebWorks' Vice President of Engineering. He is a Microsoft Certified
Professional (MCP) and has fourteen years' experience working with computer
hardware and software.  He started with Utah WebWorks in November of 1997 as
an independent consultant, then became its Technical Director in August of
1998.  He was the head programmer for IRAD for five years.  While at IRAD, Mr.
Oepping developed several new technologies, including a spatial
division/isolation technique which speeds up renderings from 200% to 700%.  He
attended Salt Lake Community College in Salt Lake City, Utah during 1994.  Mr.
Oepping filed a Chapter 7 voluntary bankruptcy petition on March 2, 1998, in
the District of Utah, Central Division of the United States Bankruptcy Court.
The petition was discharged on June 12, 1998.

      Benjamin A. Black: Mr. Black serves as a Director.  He has five years'
experience in software development programming.  He has worked as Senior
Programmer for Utah WebWorks since April of 1997.  He was lead programmer at
IRAD from 1994 through 1997.  In 1995 he received his Associate of Science
degree in electronics technology from Salt Lake Community College in Salt Lake
City, Utah.  He is a Microsoft Certified Professional (MCP) and is experienced
in advanced programming languages including C, C++, and Perl.

       Tom J. Hill: Mr. Hill was appointed as a Director for Pacific WebWorks
in May 2000.  He is the President and CEO of IntelliPay, Inc., a wholly-owned
subsidiary of Pacific WebWorks.  He has held this position with IntelliPay
since February 1998.  Prior to his service with IntelliPay, he was the sales
and marketing manager for BobCAD-CAM Inc. in San Jose California.  Tom
attended North Texas State University.  While at North Texas State, Mr. Hill
studied Public Relations and Journalism.

b) Compliance with Section 16(a) of the Exchange Act

      Section 16(a) of the Securities Exchange Act of 1934 requires our
directors, executive officers and person who own more than ten percent of a
registered class of our equity securities, to file with the securities and
Exchange

                                      23
<PAGE>


Commission (the "SEC") initial reports of ownership and reports of changes in
ownership of common stock and our other equity securities.  Officers,
directors and greater than ten-percent beneficial owners are required by SEC
regulations to furnish Pacific WebWorks with copies of all Section 16(a)
reports they file.  Based solely upon review of the copies of such forms
furnished to us during the fiscal year ended December 31, 2000, we believe all
filing requirements under Section 16(a) were complied with in a timely manner.


                 ITEM 11: EXECUTIVE COMPENSATION

      None of the named executive officers have received compensation in
excess of $100,000 during the past fiscal year from Pacific WebWorks nor its
subsidiaries.  Mr. Larsen, who served as our CEO during fiscal year 2000
received $60,000 in compensation for that year.

Compensation of Directors.

      We do not have any standard arrangement for compensation of our
directors for any services provided as director, including services for
committee participation or for special assignments.

Employment Contracts.

      Due to the changes in directors and executive officers we currently have
only an employment contract with  Mr. Larsen, our President.  His agreement is
effective for one year and is automatically renewed annually unless
terminated.  He receives an annual base salary of $60,000, medical insurance
and discretionary bonuses not to exceed an additional $65,000.  He may be
terminated for cause if he acts improperly or negligently in his position,
engages in dishonest or illegal conduct, and/or breaches company policies and
procedures.  He may be terminated for disability if he fails to perform duties
for 90 consecutive days for mental or physical health reasons.  He promised to
not compete with us for a period of one year after his employment expires or
terminates, unless he assures us in writing that confidential and proprietary
information will not be jeopardized.  All inventions and improvements in our
products or methods of conducting business shall remain our property.  He
agrees not to solicit employees, customers or others for a period of two years
after the termination of his employment.  After termination or resignation, he
agrees not to disclose or use confidential or proprietary information.  The
agreement provides compensation if we have a change in control or if the he
resigns, or if the employment is terminated.


              ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
                            OWNERS AND MANAGEMENT

      The following table sets forth the beneficial ownership of Pacific
WebWorks outstanding common stock of  each person or group known by us to own
beneficially more than 5% of our outstanding common stock; each of our
executive officers; each of our directors; and all executive officers and
directors as a group.

      Beneficial ownership is determined according to the rules of the SEC and
generally includes voting or investment power with respect to securities.
Except as indicated by footnote, the persons named in the table below have
sole voting and investment power with respect to all shares of common stock
shown as beneficially owned by them.  The inclusion of any shares as
beneficially owned does not constitute an admission of beneficial ownership of
those shares.  The percentage of beneficial ownership is based on 18,337,475
outstanding as of March 8, 2001 shares of common stock.


                          CERTAIN BENEFICIAL OWNERS

                                      Common Stock Beneficially Owned
                                      --------------------------------
Name and Address of            Number of Shares of
Beneficial Owners              Common Stock           Percentage of Class
---------------------------    --------------------   -------------------
LVT Associates, LLC
2247 Emerson
Salt Lake City, Utah 84108            1,375,000             7.5%

Net Strategic Investments, LLC
1986 E. Falcon Hill Circle
Sandy, Utah 84092                     1,117,500 (1)         6.1%




                            DIRECTORS AND OFFICERS


                                     Common Stock Beneficially Owned
                                     --------------------------------
Name and Address of          Number of Shares of
Beneficial Owners            Common Stock                 Percentage of Class
--------------------------   ----------------------       -------------------

Christian R. Larsen               1,117,500 (1)                    6.1%
1760 Fremont Drive
Salt Lake City, Utah 84104

Kenneth W.  Bell                    259,491 (2)                    1.4%
1760 Fremont Drive
Salt Lake City, Utah 84104

Benjamin A. Black                   500,000                        2.7%
1760 Fremont Drive
Salt Lake City, Utah 84104

Tomas R. Eldredge                    27,273 (3)                Less than 1%
1760 Fremont Drive
Salt Lake City, Utah 84104

Tom Hill                            553,056                        3.0%
2481 Valleywood Drive
San Bruno, California 94066

Allan E. Oepping                    725,000                        4.0%
1760 Fremont Drive
Salt Lake City, Utah 84104

All executive officers and         3,182,320                       17.3%
directors as a group

(1) Mr. Larsen has acquired an ownership interest in Net Strategic
Investments.

(2) Includes 80,610 shares held by Mr. Bell, 141,002 shares owned jointly with
    his spouse and 37,879 options exercisable within 60 days.  The options
    were approved by our board of directors in March 2001 to replace already
    existing Logio options.  The new options have been converted at a one to
    6.6 ratio for the number of shares granted.  Exercise prices for these
    options are at $0.875


                                      25

<PAGE>

(3) Represents options to purchase Pacific WebWorks, Inc. common stock that
    have been approved by our board of directors in March 2001 to replace
    already existing Logio options.  The 27,273 options have been converted at
    a one to 6.6 ratio for the number of shares granted.  Exercise prices for
    these options are at $0.875.


ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      The following information summarizes certain transactions we have either
engaged in since the beginning of our past fiscal year or propose to engage in
involving our executive officers, directors more than 5% stockholders, or
immediate family members of such persons:

      On April 4, 2000 we signed a reorganization agreement to acquire all of
the outstanding shares of IntelliPay, Inc., a Delaware corporation.  As a
result of this transaction Tom J. Hill, the President of IntelliPay, was
appointed to our board of directors.

      On October 31, 2000 we signed a reorganization agreement to acquire all
of the outstanding shares of Logio, Inc.  Kenneth W. Bell was President, CEO
and director of Logio and Thomas R. Eldredge was Logio's Chief Financial
Officer.  While the acquisition was being completed, Kenneth Bell was
appointed as our Chief Executive Officer and interim Director and Thomas
Eldredge was appointed as Secretary/Treasurer and Chief Financial Officer.


                                   PART IV

   ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(1) Financial Statements
      Independent auditors report....................................... F-3
      Consolidated Balance Sheets as of December 31, 2000 and
        December 31, 1999............................................... F-4
      Consolidated Statements of Operations for Years Ended
        December 31, 2000, 1999 and 1998 ............................... F-6
      Consolidated Statements of Stockholder's Equity for Years
        Ended December 31, 2000, 1999 and 1998.......................... F-7
      Consolidated Statements of Cash Flows for Years Ended
       December 31, 2000, 1999 and 1998 ................................ F-8
      Notes to Consolidated Financial Statements ........................F-10

(2) All schedules of the Registrant for which the provision is made in the
applicable accounting regulations of the Securities and Exchange Commission
are not required under the related instructions, are inapplicable, or have
been disclosed in the Notes to Consolidated Financial Statements, and
therefore, have been omitted.

(3) Exhibits

Exhibit
Number      Description
------      -----------
2.1         Agreement and Plan of Reorganization between Pacific WebWorks and
            IntelliPay, dated April 4, 2000 (Incorporated by reference to
            exhibit No. 2.1for Pacific WebWork's Form 8-K, filed April 19,
            2000.)
2.2         Agreement and Plan of Reorganization between Pacific WebWorks and
            Logio, dated  October 31, 2000 (Incorporated by reference to
            exhibit No. 2.1 for Pacific WebWork's Form 8-K, filed November 14,
            2000.)
3.1         Articles of Incorporation of Asphalt Associates, Inc.
            (Incorporated by reference to exhibit No. 3.1 for Pacific
            WebWork's Form 10, as amended, file No. 0-26731, filed July 16,
            1999.)

3.2         Articles of Merger for Asphalt Associates, Inc., dated January 6,
            1999 (Incorporated by reference to exhibit No. 2.1 for Pacific
            WebWork's Form 10, as amended, file No. 0-26731, filed July 16,
            1999.)
3.3         Articles of Share Exchange, filed February 8, 2001.

                                      26
<PAGE>

3.4         Amended and Restated Bylaws of Pacific WebWorks, Inc.
            (Incorporated by reference to exhibit No.  3.2 for Pacific
            WebWork's Form 10, as amended, file No. 0-26731, filed July 16,
            1999.)
10.1        Master Service Agreement between Electric Lightware, Inc., and
            Utah WebWorks, Inc., dated February 2, 1998.  (Incorporated by
            reference to exhibit No. 10.1 for Pacific WebWork's Form 10, as
            amended, file No. 0-26731, filed July 16, 1999.)
10.2        Internet Access Agreement, Addendum to Master Service Agreement
            between Electric Lightwave, Inc., and Utah WebWorks, Inc., dated
            February 2, 1998 (Incorporated by reference to exhibit No. 10.2
            for Pacific WebWork's Form 10, as amended, file No. 0-26731, filed
            July 16, 1999.)
10.3        Form of Employment Agreement with management (Incorporated by
            reference to exhibit No. 10.3 for Pacific WebWork's Form 10, as
            amended, file No. 0-26731, filed July 16, 1999.)
10.4        Lease Agreement between Utah WebWorks, Inc. and Westgate Business
            Center,  dated January 11, 1999 (Incorporated by reference to
            exhibit No. 10.6 for Pacific WebWork's Form 10, as amended, file
            No. 0-26731, filed July 16, 1999.)
10.5        Strategic Reseller Agreement with U.S. Merchant Systems
            (Incorporated by reference to exhibit No.  10.9 for Pacific
            WebWork's Form 10, as amended, file No. 0-26731, filed July 16,
            1999)
10.8        Purchase Agreement between Pacific WebWorks and U.S. Merchant
            Systems, Inc., dated February 22, 1999 (Incorporated by reference
            to exhibit No. 2.3 for Pacific WebWork's Form 10-K, filed March
            10, 2000)
10.9        Registration Rights Agreement between Pacific WebWorks and Midwest
            First National, Inc. and Condiv Investments, Inc. and Columbia
            Financial Group, dated February 22, 2000 (Incorporated by
            reference to exhibit No. 10.11 for Pacific WebWorks's Form S-1
            Registration Statement, File No.  333-38026, effective June 12,
            2000.)
10.10       Lease Agreement between Pacific WebWorks and Principal Property
            Management, LLC, dated January 1, 2001.
21.1        Subsidiaries of Pacific WebWorks.


(b)   Reports on Form 8/K

      On November 14, 2000 we filed a report on Form 8-K under Item 2 and 7
regarding the Agreement and Plan of Reorganization between Pacific WebWorks
and Logio, Inc.  We filed pro forma financial statements for he period ended
September 30, 2000 and the year ended December 31, 1999.  On January 3, 2001
we amended this Form 8-K and filed financial statements for Logio for the nine
month period ended September 30, 2000 and 1999 and fiscal years ended December
31, 1999 and 1998, along with pro forma financial statements for the years
ended December 31, 1999 and for the nine month period ended September 30,
2000.

      On December 20, 2000 we filed an amended report on Form 8-K under Item 5
regarding the effective date of our registration statement on Form S-4 related
to the registration of the acquisition shares.  We amended this 8-K on
December 22, 2000.

      On February 5, 2001 we filed a report on Form 8-K under Item 5 regarding
Logio stockholder approval of the acquisition agreement.

      On March 13, 2001 we filed a report on Form 8-K under Item 5 regarding
the listing of our common stock on the Berlin Exchange.


                                      27
<PAGE>
                                  SIGNATURES

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

                                          Pacific WebWorks, Inc.

       3/30/01                      /s/ Christian R. Larsen
Date:_______________            By:_____________________________________
                                        Christian R. Larsen,
                                        President 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.



      3/30/01                       /s/ Kenneth W. Bell
Date: ____________              By:_____________________________________
                                        Kenneth W.  Bell
                                        Chief Executive Officer and Director


       3/30/01                      /s/ Thomas R. Eldredge
Date: ____________              By:_____________________________________
                                        Thomas R. Eldredge
                                        Secretary/Treasurer and Chief
                                        Financial  Officer


       3/30/01                       /s/ Allan E. Oepping
Date: ____________              By: ____________________________________
                                         Allan E. Oepping
                                         Director


      3/30/01                       /s/ Benjamin A. Black
Date: ____________              By: ____________________________________
                                        Benjamin A. Black
                                        Director


       3/30/01                      /s/ Tom J. Hill
Date: ____________              By: ____________________________________
                                        Tom J. Hill
                                        Director



<PAGE> 28





                   Pacific WebWorks, Inc. and Subsidiaries

                      Consolidated Financial Statements

                      December 31, 2000, 1999 and 1998

<PAGE> 29

                               C O N T E N T S



Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . .3

Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . 4

Consolidated Statements of Operations . . . . . . . . . . . . . . . . . . . 6

Consolidated Statement of Stockholders' Equity . . . . . . . . . . . . . . .7

Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . 8

Notes to the Consolidated Financial Statements . . . . . . . . . . . . . . 10



<PAGE> 30



                            CHISHOLM & ASSOCIATES
                         Certified Public Accountants
                                P.O. Box 540216           Office (801)292-8756
                         North Salt Lake, Utah 84054      FAX (801) 292-8809

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

                         INDEPENDENT AUDITOR'S REPORT



To the Board of Directors and Stockholders of
Pacific WebWorks, Inc.
Salt Lake City, UT

We have audited the accompanying consolidated balance sheets of Pacific
WebWorks, Inc. and Subsidiaries as of December 31, 2000 and 1999 and the
related consolidated statements of operations, stockholders' equity and cash
flows for the years ended December 31, 2000, 1999 and 1998.  These financial
statements are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Pacific
WebWorks, Inc.  as of  December 31, 2000 and 1999 and the consolidated results
of their operations and cash flows for the years ended December 31, 2000,
1999, and 1998  in conformity with generally accepted accounting principles.

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


/s/ Chisholm & Associates

Chisholm & Associates
North Salt Lake, Utah
March 2, 2001

<PAGE> 31

                   Pacific WebWorks, Inc. and Subsidiaries
                         Consolidated Balance Sheets


                                    Assets

                                                          December 31,
                                                      2000           1999
                                                 -------------- -------------
Current assets
   Cash and Cash Equivalents                     $     163,801  $    153,898
   Accounts Receivable (less allowance of
    $88,487 and $3,798 respectively)                   257,492       101,429
   Employee Receivable                                   2,469         4,578
   Prepaid Expenses                                    275,022        16,333
   Accounts Receivable - Related Party                       -         6,800
   Notes Receivable - Related Party                          -       166,046
                                                 -------------- -------------
Total Current Assets                                   698,784       449,084
                                                 -------------- -------------

Property and Equipment, Net - at cost                  374,259       171,393
                                                 -------------- -------------
Other Assets
   Deposits                                             17,250         5,250
   Goodwill, less accumulated amortization           4,041,226             -
   Computer Software Costs, less
     accumulated amortization                            3,008         4,832
   Software Development Costs, less
     accumulated amortization                          270,495             -
                                                 -------------- -------------
 Total Other Assets                                  4,331,979        10,082
                                                 -------------- -------------

      Total Assets                               $   5,405,022  $    630,559
                                                 ============== =============










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

                                     -4-
<PAGE> 32


                   Pacific WebWorks, Inc. and Subsidiaries
                         Consolidated Balance Sheets
                                 (Continued)

                     Liabilities and Stockholders' Equity


                                                           December 31,
                                                       2000           1999
                                                  -------------- -------------
Current Liabilities
   Current Maturities of Long-Term Obligation     $       2,425  $          -
   Accounts Payable                                     611,950        74,550
   Accrued Expenses                                     390,209        70,177
   Deferred Revenue                                   1,811,020             -
   Note Payable - Related Party                         250,000             -
   Notes Payable                                        216,580       500,000
                                                  -------------- -------------
Total Current Liabilities                             3,282,184       644,727
                                                  -------------- -------------

Capital Lease Obligation, less Current Maturities $         670             -
                                                  -------------- -------------

Stockholders' Equity
   Common Stock, authorized 50,000,000 shares of
    $.001 par value, issued and outstanding
    15,008,342 shares in 2000 and 10,395,679
    shares in 1999                                       15,008        10,396
   Additional Paid-in-Capital                        10,153,603     2,762,188
   Accumulated Deficit                               (8,046,443)   (2,786,752)
                                                  -------------- -------------
       Total Stockholders' Equity                     2,122,168       (14,168)
                                                  -------------- -------------

Total Liabilities and Stockholders' Equity        $   5,405,022  $    630,559
                                                  ============== =============




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

                                     -5-

<PAGE> 33

                   Pacific WebWorks, Inc. and Subsidiaries
                     Consolidated Statements of Operations


                                                      For the
                                                    Years Ended
                                                    December 31,
                                          2000          1999         1998
                                     ------------- ------------- -------------
Net Revenues                         $  4,954,384  $    305,628  $    172,395

Cost of Sales                             811,506        42,874       188,974
                                     ------------- ------------- -------------

Gross Profit                            4,142,878       262,754       (16,579)
                                     ------------- ------------- -------------
Expenses:

   Selling Expenses                     4,802,397       406,917        30,180
   Research & Development               1,044,842       320,479        11,949
   Depreciation & Amortization          1,095,261        30,572        13,151
   Options & Warrants issued for
    compensation and services              28,366     1,242,584             -
   General & Administrative             2,375,252       786,740        67,845
                                     ------------- ------------- -------------

      Total Operating Expenses          9,346,118     2,787,292       123,125
                                     ------------- ------------- -------------

  Loss from Operations                 (5,203,240)   (2,524,538)     (139,704)

Other Income (Expenses)

   Interest Expense                       (70,440)      (19,243)      (10,761)
   Interest Income                         13,989         1,246             -
   Loss on Investment                           -       (25,000)            -
                                     ------------- ------------- -------------

Net Loss                             $ (5,259,691) $ (2,567,535) $   (150,465)
                                     ============= ============= =============
Net Loss Per Common Share -
 Basic and Diluted                   $       (.40) $      (0.27) $      (0.03)
                                     ============= ============= =============

Weighted average shares outstanding    13,140,360     9,632,500     5,000,000
                                     ============= ============= =============

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

                                     -6-
<PAGE> 34

                            Pacific WebWorks, Inc.
                Consolidated Statement of Stockholders' Equity
             For the Years ended December 31, 2000, 1999 and 1998
<TABLE>
<CAPTION>
                                                                Additional
                                               Common Stock     Paid in      Accumulated
                                           Shares      Amount   Capital      Deficit       Total
                                       ------------- ---------- ------------ ------------- -------------
<S>                                    <C>           <C>        <C>          <C>           <C>
Balance, December 31, 1997                5,000,000  $   5,000  $     5,000  $    (68,752) $    (58,752)

Net loss December 31, 1998                        -          -            -      (150,465)     (150,465)
                                       ------------- ---------- ------------ ------------- -------------

Balance, December 31, 1998                5,000,000      5,000        5,000      (219,217)     (209,217)

Reverse merger & reorganization
 adjustment                               5,000,000      5,000      995,000             -     1,000,000

September 1999, shares issued for
 insurance policy at $1.43 per
 share, valued at $20,000                    14,000         14       19,986             -        20,000

December 1999, shares issued for
 payment on notes payable of
 $500,000 at $1.31 per share                381,679        382      499,618             -       500,000

Consulting compensation for
 warrants issued                                  -          -    1,242,584             -     1,242,584

Net loss December 31, 1999                        -          -            -    (2,567,535)   (2,567,535)
                                       ------------- ---------- ------------ ------------- -------------

Balance, December 31, 1999               10,395,679     10,396    2,762,188    (2,786,752)      (14,168)

January 2000, shares issued for
 equity of World Commerce Network,
 LLC at $2.00 per share                       4,663          4        9,176             -         9,180

April 2000, shares issued to acquire
 Intellipay, Inc. at $1.80 per share      2,400,000      2,400    4,317,600             -     4,320,000

June 2000, shares issued for payment
 on notes payable of $1,000,000 at
 $2.50 per share                            400,000        400      999,600             -     1,000,000

June 2000, shares issued for payment
 on notes payable of $1,040,000
 at $1.00 per share                       1,040,000      1,040    1,036,496             -     1,037,536

August 2000, shares issued for
 insurance policy at $1.44
 per share                                   18,000         18       25,927             -        25,945

September 2000, shares issued for
 payment on notes payable of
 $600,000 at $1.00 per share                600,000        600      599,400             -       600,000

October 2000, shares issued for cash
 at $2.50 per share                         150,000        150      374,850             -       375,000

Consulting Compensation for
 warrants issued                                  -          -       13,216             -        13,216

Compensation for stock options granted            -          -       15,150             -        15,150

Net loss December 31, 2000                        -          -            -    (5,259,691)   (5,259,691)
                                       ------------- ---------- ------------ ------------- -------------

Balance, December 31, 2000               15,008,342  $  15,008  $10,153,603  $ (8,046,443) $  2,122,168
                                      ============== ========== ============ ============= =============


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

                                       7
</TABLE>
<PAGE> 35

             Pacific WebWorks, Inc. and Subsidiaries
             Consolidated Statements of Cash Flows

                                                      For the
                                                    Years Ended
                                                    December 31,
                                          2000          1999         1998
                                     ------------- ------------- -------------
Cash Flows from Operating Activities:
  Net Loss                           $ (5,259,691) $ (2,567,535) $   (150,465)
  Adjustments to reconcile net loss
   to net cash used in operations
   (net of acquisitions of WCN and
   Intellipay):
     Depreciation & Amortization        1,095,261        30,572        13,151
     Warrants & Options issued for
      compensation and services            28,366     1,255,800             -
     Bad Debt                             111,731             -         4,055
     Common stock issued for insurance     25,945        20,000             -
     Loss on Investment                         -        25,000             -
   Change in assets and liabilities:
     Accounts receivable                 (150,025)      (94,779)       13,828
     Accounts receivable -
      related party                         6,800        (6,800)            -
     Prepaid expenses                    (258,689)      (29,549)            -
     Accounts Payable and
      accrued expenses                    478,775       121,064          (755)
     Deferred Revenue                   1,821,378             -             -
                                     ------------- ------------- -------------
Net Cash Flows used in Operating
 Activities                            (2,100,149)   (1,246,227)     (120,186)
                                     ------------- ------------- -------------
Cash Flows from Investing Activities:
  Cash paid for property and equipment   (250,373)     (148,135)      (12,675)
  Cash paid for deposits                  (12,000)            -        (5,250)
  Cash paid for investment                      -       (25,000)            -
  Cash acquired in acquisitions             9,718             -             -
  Cash from escrow                              -       750,000             -
  Cash paid to related party                    -      (166,046)            -
                                     ------------- ------------- -------------
Net Cash provided by (used in)
  Investing Activities                   (252,655)      410,819       (17,925)
                                     ------------- ------------- -------------
Cash Flows from Financing Activities:
   Cash from debt financing             2,006,580       980,000       381,300
   Issuance of stock for cash             375,000             -             -
   Principle payments on Debt
    financing                             (18,873)            -      (239,323)
                                     ------------- ------------- -------------
Net Cash Flows provided by
 Financing Activities                   2,362,707       980,000       141,977
                                     ------------- ------------- -------------
Net increase in cash                        9,903       144,592         3,866

Cash and Cash Equivalents,
 beginning of period                      153,898         9,306         5,440
                                     ------------- ------------- -------------
Cash and Cash Equivalents,
 end of period                       $    163,801  $    153,898  $      9,306
                                     ============= ============= =============

Supplemental Cash Flow Information
   Cash Paid for:
     Interest                        $     29,213  $      1,400  $     14,262
     Taxes                           $          -  $          -  $          -



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

                                8

<PAGE> 36


                      Pacific WebWorks, Inc.
              Consolidated Statements of Cash Flows
                           (continued)


Supplemental Non-Cash Disclosures:

During 1999, 14,000 shares of common stock were issued at $1.43 per share for
a $20,000 insurance policy.

During 1999, 381,679 shares of common stock were issued at $2.62 per share in
payment of a $500,000 notes payable.

During 1999, 400,000 warrants were issued for non-employee services performed
during the year.  These warrants are valued at $1,255,800.

For 1999, the Company's share of the recognized loss in the joint venture is
$25,000.

During 2000, 18,000 shares of common stock were issued at $1.44 per share for
a $25,945 insurance policy.

During 2000, 400,000 shares of common stock were issued to a related party at
$2.50 per share in payment of a $1,000,000 notes payable.

During 2000, 1,640,000 shares of common stock were issued to a related party
at $1.00 per share in payment of  $1,637,536 notes payable and accrued
interest.

During 2000, compensation expense of $15,150 was recorded for stock options
granted to employees.

During 2000, compensation expense of $13,216 was recorded for services
received for warrants.






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

                                9

<PAGE> 37


                      Pacific WebWorks, Inc.
          Notes to The Consolidated Financial Statements
                 December 31, 2000, 1999 and 1998

NOTE 1 - Summary of Significant Accounting Policies

     a.  Organization

         Pacific WebWorks, Inc., ("the Company") was organized under the laws
of the state of Nevada on May 18, 1987 as Asphalt Associates, Inc.  On
December 31, 1998 the board of directors changed the name of the Company to
Pacific Webworks, Inc.  On January 11, 1999, the Company merged with Utah
Webworks, Inc., a Utah corporation organized April 10, 1997.  The share
exchange with Utah Webworks was accounted for as a reverse merger, therefore
all financial information prior to January 11, 1999 is that of the accounting
survivor being Utah Webworks.  Pacific Webworks is currently engaged in
developing, selling and servicing computer and internet related software and
hardware products.

     Acquisition of World Commerce Network, LLC

          Effective January 1, 2000, the Company issued 4,663 shares of its
common stock to U.S. Merchant  Systems, Inc. for 1% of the outstanding stock
of World Commerce Network, LLC (WCN).  The shares were valued at $9,180.  The
issuance increased the Company's ownership in WCN to 51% and WCN therefore
became a subsidiary of the Company.  In June 2000, the Company paid $100 for
49% of the outstanding shares of WCN, thereby making WCN a wholly owned
subsidiary of the Company.  The operations of WCN have been consolidated with
the Company's operations effective January 1, 2000.  Prior to the additional
1% purchase, the Company owned 50% of WCN and recorded its investment using
the equity method.  The balance at December 31, 1999 was $0.

         Acquisition of Intellipay, Inc.

         On April 4, 2000, the Company completed an Agreement and Plan of
Reorganization with Intellipay, Inc. a private Delaware corporation
(Intellipay).  The Company issued 2,400,000 shares of common stock valued at
$4,320,000 for all of the outstanding shares of Intellipay.  Thereby
Intellipay became a wholly owned subsidiary of the Company.  The transaction
was recorded using the purchase method of accounting.

     b.  Accounting Method

         The Company recognizes income and expenses on the accrual basis of
accounting.

     c.  Earnings (Loss) Per Share

         The computation of net loss per share of common stock is based on the
weighted average number of shares outstanding during each period presented.
Potentially issuable common shares totaling 1,107,606 from the exercise of
stock options and warrants were excluded from the calculation of diluted loss
per share because their effects were anti-dilutive.

                                        Loss         Shares       Per Share
                                        (Numerator) (Denominator) Amount
                                        ------------ ------------ -----------
For the year ended December 31, 2000:
  Income (loss) from operations         $(5,203,240)
                                        ------------
  Basic EPS
  Income (loss) to common stockholders  $(5,259,691)  13,140,360  $     (.40)
                                        ============ ============ ===========



                                10
<PAGE> 38



                      Pacific WebWorks, Inc.
          Notes to The Consolidated Financial Statements
                 December 31, 2000, 1999 and 1998

NOTE 1 - Summary of Significant Accounting Policies (continued)

     c.  Earnings (Loss) Per Share (continued)

                                        Loss         Shares       Per Share
                                        (Numerator) (Denominator) Amount
                                        ------------ ------------ -----------
For the year ended December 31, 1999:
  Income (loss) from operations         $(2,524,538)
                                        ------------
  Basic EPS
  Income (loss) to common stockholders  $(2,567,535)   9,632,500  $     (.27)
                                        ============ ============ ===========

For the year ended December 31, 1998:
  Income (loss) from operations         $  (139,704)
                                        ------------
  Basic EPS
  Income (loss) to common stockholders  $  (150,465)   5,000,000  $     (.03)
                                        ============ ============ ============

       The following is the calculation for Weighted-average common shares
used in basic and dilutive net loss per common share:

                                                Year ended December 31,
                                            2000        1999          1998
                                        ------------ ------------ ------------
    Common shares outstanding during
      the entire period                  10,395,679    5,000,000    5,000,000
    Weighted-average common shares
      issued during the period            2,744,681    4,632,500            -
    Weighted-average common shares
      used in basic EPS                  13,140,360    9,632,500    5,000,000
    Dilutive effects of potential
      common shares                               -            -            -
                                        ------------ ------------ ------------
    Weighted-average number of common
     shares and dilutive potential
     common stock used in diluted EPS    13,140,360    9,632,500    5,000,000
                                        ------------ ------------ ------------

     d.  Cash and Cash Equivalents

         The Company considers all highly liquid investments with maturities
of three months or less to be cash equivalents.



                                11

<PAGE> 39


                      Pacific WebWorks, Inc.
          Notes to the Consolidated Financial Statements
                 December 31, 2000, 1999 and 1998

NOTE 1 - Summary of Significant Accounting Policies (continued)

     e.  Provision for Income Taxes

         At December 31, 2000, the Company has net operating loss
carryforwards totaling approximately $8,046,443 that may be offset against
future taxable income through 2013.  No tax benefit has been reported in the
2000 financial statements since the loss carryforwards are offset by valuation
allowance of the same amount.

         Deferred tax assets and the valuation account is as follows at
December 31, 2000 and 1999:

                                            2000          1999
                                       ------------- ------------
        Deferred tax asset
           NOL carryforward            $  2,736,000  $   947,400
           Valuation allowance           (2,736,000)    (947,400)
                                       ------------- ------------
                                       $          -  $         -
                                       ============= ============


     f.  Use of Estimates in the Preparation of Financial Statements

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

     g.  Revenue Recognition

         The Company recognizes income and expense on the accrual basis of
accounting.  The Company receives revenues from the sales of access to its
web-based applications, the performance of consulting and training and from
the continual hosting of its clients' web sites.  The initial term of all
agreements into which the company enters with its clientele for its web-based
applications is one year.  The revenues related to these contracts are,
therefore, recognized ratably over the initial term of the contract.  The
monthly charges related to hosting and gateway access are recognized when
billed in accordance with SOP 97-2 as services are performed.  Any additional
consulting fees or training fees, outside of the initial contract, related to
any Visual WebTools products are recognized as the service is delivered

     h.  Recently Adopted Accounting Pronouncements/Deferred Revenue

         In December 1999, the Securities and Exchange Commission (SEC) issued
Staff Accouting Bulletin (SAB) No. 101, "Revenue Recognition in Financial
Statements."  SAB 101 clarifies application of generally accepted accounting
principles to revenue transactions.  The Company changed its accounting method
during 2000 to conform to the views of the SEC staff as documented in SAB 101.
The change involves that of accounting for up-front fees and, in accordance
with SAB 101, the Company is amortizing such fees over one year, which
generally represents the longer of the contractual period or the expected life
of the customer relationship.  There is no cumulative effect adjustment for
the change in 2000 as there were not significant up-front fees relating to the
change prior to January 1, 2000.  Pursuant to this new accounting policy the
Company has deferred revenue of $1,821,378 at December 31, 2000.  The Company
has also deferred commissions paid in connection with deferred revenues and
has recorded prepaid expenses of $275,022 at December 31, 2000.

                                12

<PAGE> 40

                      Pacific WebWorks, Inc.
          Notes to the Consolidated Financial Statements
                 December 31, 2000, 1999 and 1998

NOTE 1 - Summary of Significant Accounting Policies (continued)

     i.  Depreciation

         Depreciation of property and equipment is provided on the
straight-line method over the estimated useful lives of the assets.
Depreciation expense for the periods ended December 31, 2000 and 1999  is
$126,708 and $28,572, respectively.

     j.  Major Customers

         During 1999 and 1998 the Company had major customers that
individually accounted for 10% or more of the annual sales.  During 1998, four
customers generated sales in the amount of $118,744 or 68% of total sales as
follows:
               Customer                Sales       %
               ---------              -------    ------
                 A                     28,161      16
                 B                     21,271      12
                 C                     24,422      14
                 D                     44,890      26

         During 1999, two customers generated sales in the amount of $124,344
or 41% of total sales as follows:

               Customer                 Sales      %
               ---------               -------   ------
                 A                      64,535     21
                 B                      59,809     20

         During 2000, the Company had no major customers.


     k.  Impairment of Long Lived Assets

         Fixed assets are evaluated periodically by management and if impaired
are written down to the fair market value.

     l.  Consolidation Policy

         The December 31, 2000 financial statements are consolidated financial
statements including the accounts of Pacific Webworks, Inc., World Commerce
Network, LLC, and Intellipay, Inc.  All Intercompany transactions and accounts
have been eliminated in the consolidation.

NOTE 2 - Going Concern

         The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern.  The Company has had
recurring operating losses since inception and is dependent on financing to
continue operations. The financial statements do not include any adjustment
that might result from the outcome of this uncertainty.  It is management's
plan to continue to refine its operations by taking steps to reduce the
Company's burn rate, solicit funding, and increase cash sales.


                                13

<PAGE> 41

                      Pacific WebWorks, Inc.
          Notes to the Consolidated Financial Statements
                 December 31, 2000, 1999 and 1998

NOTE 3 - Property and Equipment

         Property and Equipment consists of the following at December 31, 2000
and 1999:
                                                                Estimated
                                             December 31,       Useful
                                          2000           1999   Lives
                                       ----------- ------------ ------------
         Computer Equipment            $  332,714  $    82,165    3-5 yrs
         Equipment                         96,833       39,558    3-5 yrs
         Software                          74,342       27,894      3 yrs
         Furniture and Fixtures            72,090       59,138      7 yrs
         Leasehold improvements             6,667        6,667      3 yrs
                                       ----------- ------------
           Total                          582,646      215,422
         Less Accumulated Depreciation   (208,387)     (44,029)
                                       ----------- ------------

                                          374,259      171,393
                                       =========== ============

NOTE 4 - Notes Payable

         During 1999, the Company received $980,000 cash and $20,000 of
equipment from a company.  In December 1999, $500,000 of the note was
converted to 381,679 restricted shares of the company's common stock.  The
remaining balance of $500,000 was converted to 500,000 shares of common stock
during 2000.

         During 2000, the Company received cash of $216,580 from a
corporation.  The note is non-interest bearing and due upon demand.

NOTE 5 - Notes Payable - Related Party

         During 2000, the Company received cash of $250,000 from Principal
Funding Group, a shareholder.  The note bears interest at 13% and is due
within one year.

NOTE 6 - Lease Obligation

         The Company has a capital lease obligation to a corporation for a
copier.  The lease requires monthly payments of $286 through April 2002, bears
interest at 10%, and is secured by the copier.  The lease obligation due at
December 31, 2000 is $3,095.

         Future minimum lease payments are as follows at December 31, 2000:

                     2001                                  $   3,423
                     2002                                      1,144
                                                           ----------
                     Total Obligation                          4,567
                     Less: Portion representing interest      (1,472)
                                                           ----------
                     Total Principle Obligation                3,095
                     Less: Current Maturities                 (2,425)
                                                           ----------
                     Total Long Term Principle Obligation  $     670
                                                           ==========



                                14

<PAGE> 42

                      Pacific WebWorks, Inc.
          Notes to the Consolidated Financial Statements
                 December 31, 2000, 1999 and 1998

NOTE 7 - Stockholders' Equity

         During January 2000, the Company issued 4,663 shares of its common
stock at $2.00 per share for 1% of the outstanding stock of World Commerce
Network, LLC.

         During April 2000, the Company issued 2,400,000 shares of its common
stock at $1.80 per share for all of outstanding stock of Intellipay, Inc.

         During June 2000, the Company issued 400,000 shares of its common
stock at $2.50 per share for payment on notes payable of $1,000,000.

         During June 2000, the Company issued 1,040,000 shares of its common
stock at $1.00 per share for payment on notes payable and accrued interest of
$1,037,536.

         During August 2000, the Company issued 18,000 shares of its common
stock at $1.44 per share for an insurance policy valued at $25,945.

         During September 2000, the Company issued 600,000 shares of its
common stock at $1.00 per share for payment on notes payable of $600,000.

         During October 2000, the Company issued 150,000 shares of its common
stock at $2.50 per share for cash of $375,000.  These shares were issued to
honor warrants that were exercised.

NOTE 8 - Computer Software Costs

         On May 7, 1997, the Company entered into an agreement for assignment
of a security interest and  judgement from a bank for various software service
codes and other technology they held.  Pursuant to FASB 86, the Company
capitalized these costs because the purchased software had alternative future
use, being an integral part of the internet software design product sold to
the public.  Costs of maintaining the product is charged to expense when
incurred.  The Company paid $10,000 for the transfer of these software tools
and is amortizing them over a five year life.  Amortization expense is $1,824,
$2,001 and $2,000 for the years ended December 31, 2000, 1999 and 1998,
respectively.

NOTE 9 - Software Development Costs

         Software development costs represent costs incurred for internally
developed software.  Pursuant to SOP 98-1, the Company capitalizes costs
incurred during the application development stage (designing, coding,
installing, and testing) or its software development.  Costs incurred during
the preliminary project stage and post-implementation and operation stage are
expensed as incurred.  The Company capitalized $772,448 in 1999.  The costs
are being amortized over a three year period and amortization expense charged
to operations in 2000 and 1999 was $274,824 and $274,827, respectively.


                                15

<PAGE> 43

                      Pacific WebWorks, Inc.
          Notes to the Consolidated Financial Statements
                 December 31, 2000, 1999 and 1998

NOTE 10 - Reverse Merger / Stock Split

          Effective January 11, 1999, Pacific Webworks, Inc. (a public
Company) entered into an agreement and Plan of Reorganization with Utah
Webworks, Inc., (a private company).  The agreement provides for the merger of
the Company into Utah Webworks to be treated as a reverse merger, thus making
Utah Webworks  the accounting survivor.  Pursuant to the agreement the Company
issued 5,000,000 shares of common stock to the shareholders of Utah Webworks
for all shares of their Company.  Because the historical financial information
in these financial statements prior to the reverse merger (January 11, 1999)
is that of the accounting acquirer (Utah Webworks), a 5,000 for 1 forward
stock split adjustment has been retroactively applied to the shares of Utah
Webworks, to show the effects of the reverse merger.  The 5,000,000 share
reorganization adjustment represents the shares held by the shareholders of
the public company.  The management of the Company resigned and the management
and board of Utah Webworks filled the vacancy.  Utah Webworks is in the
business of software development for computer and internet systems.  The
public company  had cash in escrow of $750,000 and a note receivable from Utah
Webworks of $250,000 as its only assets.  The cash and note receivable were
contributed to Utah Webworks as an investment in subsidiary advanced for
operations.  This business combination was accounted for using the purchase
method.

NOTE 11 - Investment in Joint Venture

          During 1999, the Company became a 50% member in World Commerce
Network, LLC (WCN).  For 1999, WCN had a net loss of $281,341, of which,
$140,671 should be recognized by the Company.  However, since the Company
contributed only $25,000 in capital, the loss on investment was limited to
this amount.  The Company's book value in this investment at December 31, 1999
was $0.  In January 2000, the Company acquired an additional 1% interest and
began accounting for this investment using the consolidation method and
changed from the equity method.  In June 2000 the Company acquired the
remaining 49% of WCN, thus it is a wholly owned subsidiary of the Company at
December 31, 2000.  WCN has been consolidated for the entire year 2000.

NOTE 12 - Related Party

          During 1999, $166,046 was recognized as a note receivable from World
Commerce Network, LLC (WCN).   There was no provision for interest and the
balance was due within the next twelve months.  Additionally as of December
31, 1999, there was an accounts receivable of $6,800 due from WCN. However, in
2000, the Company acquired all remaining outstanding stock of WCN and it
became a wholly owned subsidiary of the Company.  These receivables became
intercompany and were eliminated in consolidation at December 31, 2000.

          During 2000, the Company received cash of $250,000 from Principal
Funding Group, a shareholder.  The note bears interest at 13% and is due
within one year.


                                16

<PAGE> 44



                      Pacific WebWorks, Inc.
          Notes to the Consolidated Financial Statements
                 December 31, 2000, 1999 and 1998

NOTE 13 - Stock Warrants

          At January 1999, the Company had outstanding warrants to purchase
400,000 shares of the Company's common stock at prices ranging from $2.50 to
$6.00 per share.   The warrants became exercisable in January 1999 and expire
in January 2004.  The warrants are exercisable as follows:

            150,000 warrants at $2.50
            100,000 warrants at $3.50
            100,000 warrants at $4.50
             50,000 warrants at $6.00

          The warrants were issued to a public relations firm for promotional
services to be provided for one year from issue date.  The Company accounted
for these warrants per FASB 123 using the Black-Scholes model on the date the
warrants became measurable per EITF 96-18.  The measurement dates are as
follows: 133,000 warrants on January 28, 1999, 67,000 warrants of July 27,
1999 and the remaining 200,000 on November 27, 1999.  The resulting valuation
for the warrants is $1,255,800 of which $1,242,584 was amortized in 1999.  The
balance of $13,216 was amortized during the year 2000 and is recorded a
deferred compensation at December 31, 1999.  During 2000, warrants were
exercised in the amount of 150,000 shares for cash of $375,000.

NOTE 14 - Commitments and Contingencies

          The Company is committed to an operating lease for office space.
The lease requires the Company to pay monthly rent of $5,800 and expires in
December 2001.

          Future minimum lease payments are as follows:

                2001                  69,600
                                -------------
                Total           $     69,600
                                =============

NOTE 15 - Fair Value of Financial Instruments

          Unless otherwise indicated, the fair values of all reported assets
and liabilities which represent financial instruments (none of which are held
for trading purposes) approximate the carrying values of such instruments.



                                17

<PAGE> 45



                      Pacific WebWorks, Inc.
          Notes to the Consolidated Financial Statements
                 December 31, 2000, 1999 and 1998

NOTE 16 - Incentive Stock Option Plan

          On December 1, 1999, the Company established an Incentive Stock
Option Plan (the Plan).  The Plan covers both current and prospective
employees.  The Company reserved 1,000,000 shares of common stock under the
plan.  The Board of Directors has approved the granting of options under the
plan as follows:

          Directors, officers, employees and certain consultants have been
granted options to acquire 706,606 shares of the Company's common stock.  The
options were granted at exercise prices ranging from $1.062 - $3.44 per share.
A total of 555,606 options were granted at the market price of the Company's
common stock on the date of grant.  A total of 151,000 options were granted at
prices that were approximately 16.3% below fair market value of the Company's
common stock on the date of grant.  The options vest periodically through
December 2001.  The options expire through September 2005.

         Fair Market Value of Options Granted
        --------------------------------------

         The Company has adopted only the disclosure provisions of Financial
Accounting Standard No. 123 "Accounting for Stock-Based Compensation" (FAS
123).  Therefore, the Company accounts for stock-based compensation under the
Accounting Principles Board Opinion No. 25, under which approximately $15,000
has been recognized for compensation earned related to options issued at
exercise prices that were less than the fair market value of the Company's
stock on the date of grant.  Had compensation cost for the stock-based
compensation been determined based upon the fair value of options at the grant
date consistent with methodology set forth by FAS 123, the Company's net loss
and loss per share would have increased to the following proforma amounts:


Pro forma net earnings             2000          1999           1998
                              ------------- -------------- -------------
     As reported                (5,259,691)    (2,567,535)     (150,465)
     Pro forma                  (6,140,291)    (2,572,861)     (150,465)

Net loss per common share -
 basic and fully diluted

     As reported                      (.40)          (.27)         (.03)
     Pro forma                        (.47)          (.27)         (.03)


         The fair value of these options was estimated at the date of grant
using the Black-Scholes American option-pricing model with the following
weighted-average assumptions for 2000 and 1999: expected volatility of 201
percent and 168 percent, respectively; risk free interest rate of 6.5 percent
and 6.75 percent, respectively; and expected life of 3.5 years.  The weighted
average fair value of options granted $1.75 and $2.38 in 2000 and 1999,
respectively.  There were no options granted in 1998.

         Option pricing models require the input of highly sensitive
assumptions, including expected stock volatility.  Also, the Company's stock
options have characteristics significantly different from those of traded
options, and changes in the subjective input assumptions can materially affect
the fair value estimate.  Management believes the best input assumptions
available were used to value the options and that the resulting option values
are reasonable.


                                18

<PAGE> 46


                      Pacific WebWorks, Inc.
          Notes to the Consolidated Financial Statements
                 December 31, 2000, 1999 and 1998

NOTE 16 - Incentive Stock Option Plan (continued)

          Information with respect to the Company's stock options at December
31, 2000 is as follows:

                                                              Weighted-
                                                              Average
                                     Stock       Exercise     Exercise
                                     Options     Price        Price
                                     ----------- ------------ ------------
    Outstanding at January 1, 1998
      Granted                                 -            -            -
      Exercised                               -            -            -
      Forfeited                               -            -            -
                                     ----------- ------------ ------------
    Outstanding at December 31, 1998          -            -            -


      Granted                           797,494  $2.00-$3.44  $      2.38
      Exercised                               -            -            -
      Forfeited                               -            -            -
                                     ----------- ------------ ------------
    Outstanding at December 31, 1999    797,494  $2.00-$3.44  $      2.38
      Granted                           281,700  $1.06-$1.75  $      1.75
      Exercised                               -            -            -
      Forfeited                         371,568  $1.06-$3.44  $      2.39
                                     ----------- ------------ ------------
    Outstanding at December 31, 2000    707,606  $1.06-$3.44  $      2.21
                                     =========== ============ ============

         Additional information related to stock options outstanding and
exercised at December 31, 2000:

                  Options Outstanding
                  -------------------
                                                               Weighted-
                                                  Weighted-    Average
                                                  Average      Remaining
                          Exercise   Number       Exercise     Contractual
                          Price      Outstanding  Price        Life
                          ---------- ------------ ------------ ------------
                          $  3.44        87,879   $     3.44     3 yrs
                          $  2.63       162,727   $     2.63     3 yrs
                          $  2.00       255,000   $     2.00     3 yrs
                          $  1.75       151,000   $     1.75     4.7 yrs
                          $  1.06        50,000   $     1.06     5 yrs
                                     -----------
                                        706,606
                                     ===========


                  Options Exercisable
                  -------------------
                                                                Weighted-
                                                                Average
                                     Exercise      Number       Exercise
                                     Price         Exercisable  Price
                                     ------------- ------------ -------------
                                     $  3.44           41,918   $  3.44
                                     $  2.63           41,609   $  2.63
                                     $  2.00          255,000   $  2.00
                                     $  1.75                -   $  1.75
                                     $  1.06           50,000   $  1.06
                                                   -----------
                                                      388,527
                                                   ===========


                                19

<PAGE> 47

                      Pacific WebWorks, Inc.
          Notes to the Consolidated Financial Statements
                 December 31, 2000, 1999 and 1998

NOTE 17 - Goodwill

          The Company recorded goodwill in connection with the acquisition of
World Commerce Network, Inc. (WCN) due to the negative equity position of WCN.
A total of $240,521 was recorded upon acquisition and is being amortized over
a 5 year period.  The realization of this asset is contingent upon WCN's
ability to generate revenues from their marketing of Pacific Webworks web
tools and future hosting fees related to WCN customers.  Amortization expense
related to this acquisition was $52,113 for the year ended December 31, 2000.

         The Company also recorded goodwill in connection with the acquisition
of Intellipay, Inc. (IPAY) due to the negative equity position of IPAY.  The
Company issued 2,400,000 shares of its common stock valued at $4,320,000.  A
total of $4,532,734 was recorded upon acquisition and is being amortized over
a five year period.  The realization of this asset is contingent upon IPAY's
ability to generate revenues from their financial transaction processing
process.  Amortization expense related to this acquisition was $679,916 for
the year ended December 31, 2000.

NOTE 18 - Subsequent Events

          In January 2001, the Company committed to an operating lease for its
data center.  The lease requires the Company to pay monthly rent of $26,200
and expires in December 31, 2001.

          In February 2001, the Company engaged in a share exchange with
Logio, Inc. (Formerly Wordcruncher Technologies, Inc.) a public Nevada
corporation.  The Company issued 2,800,000 shares of its common stock for all
of the outstanding shares of Logio, Inc.  The shares were valued at $2,273,600
and the transaction was recorded using the purchase method of accounting.

          During the first three months of 2001, the Company secured $475,000
in debt financing.

          During 2001, the Company approved a new Stock Incentive Plan.  No
more than 2,500,000 shares will be granted under the plan.


                                20