UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB
 (Mark One)

        [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                  For the quarterly period ended June 30, 2000

      [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

       For the transition period from ________________ to _______________

                                    000-27763
                            (Commission file number)

                              SITESTAR CORPORATION
                              --------------------
        (Exact name of small business issuer as specified in its charter)

                  Nevada                              88-0397234
     ---------------------------------           --------------------
       (State or other jurisdiction                 (IRS Employer
     of incorporation or organization)            Identification No.)

              16133 VENTURA BOULEVARD, SUITE 635, ENCINO, CA 91436
                    (Address of principal executive offices)

                                 (818) 981-4519
                           (Issuer's telephone number)


              (Former name, former address and former fiscal year,
                          if changed since last report)

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


               APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity. As of August 14, 2000 - 24,515,270 shares of Common Stock

Transitional Small Business Disclosure Format (check one):
                        Yes   [ ]   No [X]


<PAGE>



                              SITESTAR CORPORATION
                                      Index

                                                                          Page
                                                                         Number
PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

         Condensed Consolidated Balance Sheet as of June 30, 2000          2-3

         Condensed Consolidated Statements of Operations for
         the three months ended June 30, 2000 and 1999                      4

         Condensed Consolidated Statements of Operations for
         the six months ended June 30, 2000 and 1999                        5

         Condensed Consolidated Statements of Cash Flows for
         the six months ended June 30, 2000 and 1999                       6-7

         Notes to Condensed Consolidated Financial Statements              8-9

Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations                                        10-15

Part II. OTHER INFORMATION

Item 1.  Legal Proceedings                                                 16

Item 2.  Change in Securities and Use of Proceeds                          16

Item 3.  Defaults Upon Senior Securities                                   16

Item 4.  Submission of Matters to a Vote of Security Holders               16

Item 5.  Other Information                                                 16

Item 6.  Exhibits and Reports on Form 8-K                                  16

SIGNATURES                                                                 17

Part III.                                                              EXHIBITS

                                       1

<PAGE>


PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

                      SITESTAR CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                  JUNE 30, 2000
                                  (Unaudited)

                                     ASSETS

CURRENT ASSETS
   Cash and cash equivalents                                     $     344,342
   Accounts receivable, less allowance for
     doubtful accounts of $140,000                                     168,290
  Other current assets                                                  82,594
                                                                 -------------

     Total current assets                                              595,226

PROPERTY AND EQUIPMENT, net                                            416,304
DEFERRED LOAN COSTS                                                    309,155
CUSTOMER LIST, net                                                   2,148,584
EXCESS OF COST OVER FAIR VALUE OF
   NET ASSETS ACQUIRED, net                                          2,498,736
INVESTMENTS                                                            160,000
OTHER ASSETS                                                            25,268
                                                                 -------------

TOTAL ASSETS                                                     $   6,153,273
                                                                 =============



       See the accompanying notes to the consolidated financial statements

                                       2
<PAGE>


                      SITESTAR CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED BALANCE SHEET, Continued
                                  JUNE 30, 2000
                                  (Unaudited)

                      LIABILITIES AND STOCKHOLDERS' EQUITY


CURRENT LIABILITIES
   Accounts payable                                              $     299,614
   Accrued expenses                                                     41,245
   Deferred revenue                                                    157,304
   Due to stockholder                                                   20,000
   Convertible debenture                                               500,000
   Note payable - stockholders, current portion                        228,786
   Notes payable, current portion                                       70,010
   Capital lease obligations, current portion                           47,190
                                                                 -------------

     Total current liabilities                                       1,364,149

NOTES PAYABLE - STOCKHOLDERS, less current portion                      63,766
NOTES PAYABLE, less current portion                                    442,676
CAPITAL LEASE OBLIGATIONS, less current portion                         22,141
                                                                 -------------

TOTAL LIABILITIES                                                    1,892,732

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
   Preferred Stock, $.001 par value, 10,000,000 shares
     authorized, 0 shares issued and outstanding                             -
   Common Stock, $.001 par value, 75,000,000 shares
    authorized, 24,972,179 shares issued and outstanding                24,972
   Additional paid-in capital                                        9,034,091
   Accumulated deficit                                              (4,798,522)
                                                                 --------------

     Total stockholders' equity                                      4,260,541
TOTAL LIABILITIES AND
   STOCKHOLDERS' EQUITY                                          $   6,153,273
                                                                 ==============

      See the accompanying notes to the consolidated financial statements

                                       3

<PAGE>

                      SITESTAR CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                            FOR THE THREE MONTHS ENDED JUNE 30,

                                                          2000          1999
                                                   ------------  -------------
                                                            (Unaudited)
REVENUE                                            $    386,783  $           -

COST OF REVENUE                                         196,719              -
                                                   ------------  -------------

GROSS PROFIT                                            190,064              -

SELLING, GENERAL AND
 ADMINISTRATIVE EXPENSES                                672,844         58,889

LOSS FROM OPERATIONS OF BUSINESS
 TRANSFERRED UNDER CONTRACTUAL
 OBLIGATIONS                                                  -         60,614
                                                   ------------  -------------

LOSS FROM OPERATIONS                                   (482,780)      (119,503)

OTHER INCOME (EXPENSES)
  Gain on sale of assets                                314,515              -
  Interest expense                                      (65,634)             -
                                                   ------------- -------------

LOSS BEFORE INCOME TAXES                               (233,899)      (119,503)

 INCOME TAXES                                                 -              -
                                                   ------------  -------------

NET LOSS                                           $   (233,899) $    (119,503)
                                                   ============= ==============

BASIC AND DILUTED LOSS PER SHARE                   $     (0.01)  $       (0.01)
                                                   ============  ==============

WEIGHTED AVERAGE SHARES
     OUTSTANDING - BASIC AND DILUTED                 24,358,223     18,600,036
                                                   ============  ==============

      See the accompanying notes to the consolidated financial statements

                                       4
<PAGE>

                      SITESTAR CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                               FOR THE SIX MONTHS ENDED JUNE 30,
                                                          2000          1999
                                                   ------------  -------------
                                                           (Unaudited)

REVENUE                                            $    816,387  $          -

COST OF REVENUE                                         436,385              -
                                                   ------------  -------------

GROSS PROFIT                                            380,002              -

SELLING, GENERAL AND
 ADMINISTRATIVE EXPENSES                              1,346,667        103,830

LOSS FROM OPERATIONS OF BUSINESS
 TRANSFERRED UNDER CONTRACTUAL
 OBLIGATIONS                                             42,233         94,009
                                                   ------------  -------------

LOSS FROM OPERATIONS                                 (1,008,898)      (197,839)

OTHER INCOME (EXPENSES)
  Gain on sale of assets                                363,831              -
  Interest expense                                     (103,203)             -
                                                   ------------- -------------

LOSS BEFORE INCOME TAXES                               (748,270)      (197,839)

 INCOME TAXES                                                 -              -
                                                   ------------  -------------

NET LOSS                                           $   (748,270) $    (197,839)
                                                   ============= ==============

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

WEIGHTED AVERAGE SHARES
     OUTSTANDING - BASIC AND DILUTED                 24,259,024     18,600,036
                                                   ============  ==============


      See the accompanying notes to the consolidated financial statements

                                       5

<PAGE>
                      SITESTAR CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                               FOR THE SIX MONTHS ENDED JUNE 30,
                                                          2000          1999
                                                   ------------  -------------
                                                           (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                         $   (748,270) $    (197,839)
   Adjustments to reconcile net loss
  to net cash used in operating activities:
  Depreciation and amortization expense                 764,218              -
  Amortization of debt financing costs                   51,202              -
  Gain on the sale of assets                           (363,831)             -
  Loss from operations of business transferred
    under contractual arrangements                       42,233         94,830
Stock issued in lieu of compensation                    120,000              -
  (Increase) decrease in:
    Accounts receivable                                 (34,016)             -
    Other assets                                        (20,194)             -
  Increase (decrease) in:
    Accounts payable and accrued expenses                71,931       (155,359)
    Deferred revenue                                     (1,655)             -
    Advances from stockholder                                 -         18,000
                                                   ------------  -------------
Net cash used in operating activities                  (118,382)      (240,368)
                                                   ------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of property and equipment                    (21,587)        (1,200)
  Investments                                                 -        (75,000)
   Proceeds from sale of assets                          34,703              -
                                                   ------------  -------------
Net cash provided by (used in)
   investing activities                                  13,116        (76,200)
                                                   ------------  -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Increase in book overdraft                                  -          8,410
  Advances from stockholder, net                         24,450        125,742
  Proceeds from notes payable                                 -        416,309
  Proceeds from convertible debenture                   500,000              -
  Payment of loan fees                                  (50,000)             -
  Repayment of notes payable                            (27,906)      (229,970)
  Repayment of notes payable - stockholders             (14,836)             -
  Payment on capital lease obligation                   (27,428)        (3,923)
                                                   ------------  -------------
Net cash provided by financing activities               404,280        316,568
                                                   ------------  -------------
NET (DECREASE) INCREASE IN CASH
   AND CASH EQUIVALENTS                                 299,014              -
CASH AND CASH EQUIVALENTS -
   BEGINNING OF PERIOD                                   45,328              -
                                                   ------------  -------------
CASH AND CASH EQUIVALENTS -
   END OF PERIOD                                   $    344,342  $           -
                                                   ============  =============

      See the accompanying notes to the consolidated financial statements

                                       6
<PAGE>



                      SITESTAR CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
           FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999 (continued)
                                  (Unaudited)

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

During the six months  ended June 30, 2000 and 1999,  the Company paid no income
taxes and interest of approximately $44,000 and $0, respectively.


NON CASH INVESTING AND FINANCING TRANSCATIONS:

During the quarter ended June 30, 2000, the Company  converted  $377,372 of debt
into 812,353 shares of the Company's common stock.



                                       7

<PAGE>

                      SITESTAR CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

NOTE 1 - BASIS OF PRESENTATION

The unaudited Condensed  Consolidated Financial Statements have been prepared by
Sitestar  Corporation  (the "Company" or "Sitestar"),  pursuant to the rules and
regulations of the Securities and Exchange Commission. The information furnished
herein reflects all  adjustments  (consisting of normal  recurring  accruals and
adjustments)  which are,  in the  opinion  of  management,  necessary  to fairly
present the operating results for the respective  periods.  Certain  information
and  footnote  disclosures  normally  present in annual  consolidated  financial
statements prepared in accordance with generally accepted accounting  principles
have been omitted pursuant to such rules and regulations. The results of the six
months ended June 30, 2000 are not  necessarily  indicative of the results to be
expected for the full year ending December 31, 2000.


NOTE 2 - EARNINGS PER SHARE

In 1997, the Financial  Accounting  Standard Board ("FASB") issued  Statement of
Financial  Accounting Standards ("SFAS") No. 128, "Earnings per Share." SFAS No.
128 replaced the  previously  reported  primary and fully  diluted  earnings per
share with basic and diluted  earnings per share.  Unlike  primary  earnings per
share,  basic  earnings  per share  excludes  any  dilutive  effects of options,
warrants, and convertible securities. Diluted earnings per share is very similar
to the previously  reported fully diluted earnings per share. Basic earnings per
share is computed using the weighted-average number of common shares outstanding
during the period. Common equivalent shares are excluded from the computation if
their effect is anti-dilutive. There are no common stock equivalents.


NOTE 3 - SALE OF ASSETS

On  September  30,  1999,  the  Company  sold all of the  assets  related to the
Company's  international  food  distribution  business,  also  known as  Holland
American  International  Specialties  ("HAIS").  The acquirer of the assets is a
partnership  with the  partners  being a group of  stockholders  of the Company.
Given that the sale was not an  arms-length  transaction,  the  Company  had the
business valued by an independent appraiser to determine the fair value purchase
price. The sales price was $900,000, which is to be paid as follows: 1) $200,000
is to be  offset  against  the  Company's  liability  to the a  stockholder,  2)
$654,000  for the buyer's  assumption  of all trade,  short-term  and  long-term
liabilities,  and 3) the remaining  $46,000 in the form of a note payable to the
Company in six annual  installments of $15,333 each plus accrued  interest at 8%
per annum.  The Company  was  required to defer the gain on this sale until such
time as the  purchasers  are able to refinance the debt of HAIS.  During the 2nd
quarter of 2000 the  purchasers  were able to refinance the debt and the Company
has recognized a $314,515 gain on the sale of HAIS.

In January 2000, the Company sold certain  assets and  liabilities of its wholly
owned subsidiary,  Sitestar,  Inc. for $34,703 in cash plus a note receivable in
the amount of $10,000.  The Company  recognized a gain on sale of these  certain
assets  of  $49,316.   The  Company   retained  the  "Sitestar"   trademark  and
"Sitestar.com" URL.

                                       8
<PAGE>

                      SITESTAR CORPORATION AND SUBSIDIARIES
         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, continued
                                  (Unaudited)

NOTE 4 - CONVERTIBLE DEBENTURE

On May 11,  2000 the  Company  issued  two  convertible  debentures  aggregating
$500,000.  The  debentures  bear interest at 12% per annum and are due on May 1,
2001. The debentures  are  convertible  into common stock at a rate equal to the
lowest of $.70 or 60% of the average of the three  lowest  closing bid price for
the common stock during the 20 trading days immediately preceding the conversion
date. In addition,  the Company also issued  three-year  warrants to purchase an
aggregate  of 250,000  shares of common  stock at an initial  exercise  price of
$0.77 per share. Due to the preferential  conversion feature of these debentures
the Company will capitalize  $242,857 (which  represents the value of additional
shares issuable upon  conversion at the $.70 conversion  price verses the number
of shares  issuable upon conversion at the market value at the date of issuance)
as debt issuance costs and amortize this amount over the term of the debentures.
In addition,  the warrants  issued in connection  with these  debentures have an
exercise  price  below the market  value of the  Company's  stock on the date of
issuance,  therefore the Company will  capitalize an additional  $67,500  (which
represents  the  difference in the market value at the date of issuance less the
$.77 exercise price times the number of warrants  issued) of debt issuance costs
associated with the issuance of the 250,000 warrants that will be amortized over
the term of these debentures.

The Company and the above  debenture  holders  have also agreed  that,  upon the
declaration of effectiveness of the Registration  Statement to be filed pursuant
to the  Registration  Rights  Agreement,  provided that the trading price of the
Common  Stock  is at  least  $1.00  for the ten (10)  consecutive  trading  days
immediately  preceding  the  Effective  Date,  the  debenture  holders  will  be
obligated to purchase,  and the Company  shall be obligated to sell and issue to
the debenture holders,  additional  debentures in the aggregate principal amount
of Five  Hundred  Thousand  ($500,000)  and  additional  warrants to purchase an
aggregate of 250,000  shares of Common Stock for an aggregate  purchase price of
Five Hundred Thousand Dollars  ($500,000),  with the closing of such purchase to
occur within thirty (30) days of the Effective Date. The terms of the Additional
Debentures  and the  Additional  Warrants shall be identical to the terms of the
Debentures  and the  Warrants  as  described  above,  provided  that the Initial
Conversion  Price (as defined in the Debentures)  for the Additional  Debentures
shall be seventy-seven hundredths of one dollar ($.77).



                                       9
<PAGE>


Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations

General
-------
        The following discussion and analysis should be read in conjunction with
the Company's  consolidated  financial  statements and related footnotes for the
year ended  December 31, 1999 included in its Annual Report on Form 10-KSB.  The
discussion  of results,  causes and trends  should not be construed to imply any
conclusion that such results or trends will necessarily continue in the future.

Overview
--------
    We changed our  corporate  focus from that of a food  holding  company to an
Internet  holding company with the  acquisition of Sitestar,  Inc. in July 1999.
Soon after  concluding this  acquisition,  we started  focusing on acquiring and
investing in Internet-based enterprises.  Our mission is to develop our Internet
operating subsidiaries and future investments in other Internet enterprises into
highly  focused and successful  stand-alone  Internet  businesses.  We intend to
achieve a fast-track  development  process by tapping the services,  support and
knowledge of individuals  and  organizations  that have extensive  experience in
developing Internet concepts and technologies.

    In July 1999,  we began to implement  our current  strategy of acquiring and
investing in emerging  Internet based  enterprises to create a broad and diverse
set of core Internet businesses which deliver a variety of online solutions.  In
addition to developing and integrating Internet-based technologies,  our primary
objective   is  to   create  a  mix  of   Internet   operating   companies   and
Internet-related  portfolio  investments that will enhance the value of its core
holdings.

    Our Internet  services  subsidiary began providing  Internet services to its
customers  in 1996 by  providing  Internet  access  and  enhanced  products  and
services to small and medium sized  enterprises in selected high growth markets.
We target  primarily  small and medium  sized  enterprise  customers  located in
selected high growth secondary markets.  We currently provide our customers with
Internet access and enhanced  products and services in the mid-Atlantic  area of
the United States. We have designed our comprehensive suite of enhanced products
and services to meet the  expanding  needs of our  customers and to increase our
revenue per customer. The products and services we provide include:

     o    Internet access services;
     o    Web design services;
     o    Web hosting services;
     o    End to end e-commerce solutions;
     o    Online marketing consulting; and
     o    Management of mission critical Internet applications.


                                       10
<PAGE>

Results of Operation
--------------------
    On  September  30, 1999,  the Company sold all of the assets  related to the
Company's  international  food  distribution  business,  also  known as  Holland
American  International  Specialties  ("HAIS").  The acquirer of the assets is a
partnership  with the  partners  being a group of  stockholders  of the Company.
Given that the sale was not an  arms-length  transaction,  the  Company  had the
business valued by an independent appraiser to determine the fair value purchase
price. The sales price was $900,000, which is to be paid as follows: 1) $200,000
is to be  offset  against  the  Company's  liability  to the a  stockholder,  2)
$654,000  for the buyer's  assumption  of all trade,  short-term  and  long-term
liabilities,  and 3) the remaining  $46,000 in the form of a note payable to the
Company in six annual  installments of $15,333 each plus accrued  interest at 8%
per annum.  The Company  was  required to defer the gain on this sale until such
time as the  purchasers  are able to refinance the debt of HAIS.  During the 2nd
quarter of 2000 the  purchasers  were able to refinance the debt and the Company
has recognized a $314,515 gain on the sale of HAIS.

    On December  15, 1999,  we completed  the  acquisition  of another  Internet
Company,  Neocom  Microspecialists,   Inc.  ("Neocom").  The  intangible  assets
purchased as a result of recent acquisitions represent  approximately 76% of our
total  assets  and  approximately  109% of our  stockholders'  equity.  Further,
amortization of these intangible  assets will be the largest single expense item
in our statement of operations and will be  approximately  $1.4 million in 2000.
This material  concentration of intangible  assets increases the risk of a large
charge to  earnings  in the event that the  recoverability  of these  intangible
assets is  impaired.  If we are unable to recover the costs of these  intangible
assets,  our  financial  performance  may be  negatively  impacted in the coming
periods  through  a write  down or write  off of  these  intangible  assets.  In
addition,  the  intangible  assets could  increase,  thus  increasing the yearly
amortization, if any of the 2,000,000 contingent shares are issued in connection
with the Neocom acquisition.

    In January  2000,  the Company sold certain  assets and  liabilities  of its
wholly  owned  subsidiary,  Sitestar,  Inc.  for  $34,703  in  cash  plus a note
receivable  in the amount of $10,000.  The Company  recognized a gain on sale of
these certain assets of $49,316.  The Company retained the "Sitestar"  trademark
and "Sitestar.com" URL.

    Prior to our change in corporate  focus from that of a food holding  company
to that of an Internet  holding  company,  we generated all of our revenues from
sales of specialty food products. We have historically derived a majority of our
revenues from small independent specialty food retail customers.  From inception
until July 1999, we generated  revenues  exclusively  from  wholesale and retail
sales of our food  products.  We derived  income from our  wholesale  and retail
sales  from the  excess  of the  wholesale  and  retail  prices we  charged  our
customers  over the  product  costs we paid our  suppliers.  We had a  wholesale
program  in  which  we sold  bulk  quantities  of  specialty  food  products  to
registered retailers at wholesale prices. In this program, we purchased products
from suppliers at a distributor's  discounted  price and derived income from the
difference  between this  discounted  price and the wholesale  price we charged.
Additionally,  our retail customers paid for orders by cash or credit card while
we paid our suppliers on extended terms.  As a result,  we were able to increase
our working capital between the time we received payment for orders and the time
we were required to pay suppliers.

                                       11
<PAGE>

    As a result of our change in corporate  focus from a food holding company to
an  Internet  holding  company,  we now have two other  sources of  income.  Our
e-commerce operating subsidiaries now derive our income from commissions. We are
agents  of our  fulfillment  centers  and  merely  generate  our  revenues  from
commissions per transaction,  which represent the gross selling price charged to
our customers less the amount we pay to the  fulfillment  center.  Our customers
pay us directly  and we remit the cost of the goods to our  fulfillment  centers
less our agreed upon commission  amount.  As a result of this  arrangement,  the
extent of our financial  agreement with our fulfillment centers are relegated to
the periodic  transfer and remittance of our product costs. We do not take title
to the goods sold on our e-commerce sites,  which eliminates any inventory risks
on our part. We forward all orders  directly to our fulfillment  centers,  which
eliminates the need to take possession of the goods and merchandise  sold on our
e-commerce  sites.  Our fulfillment  centers ship the purchased good directly to
our  customers on our behalf.  The shipping and handling  costs related to every
transaction  are added to the total cost of the goods  sold which the  customers
have to bear.

    Our Internet service  provider  operating  subsidiaries  derive their income
from the excess of the Internet  service prices we charge our customers over the
cost of service we pay our suppliers. Additionally, our retail customers pay for
services by cash or credit card while we pay our suppliers on extended terms. As
a result,  we are able to  increase  our  working  capital  between  the time we
receive payment for services and the time we are required to pay suppliers.

    We are operating  under an oral agreement with our  fulfillment  centers and
have no long-term obligations to continue the relationship with them if we deem,
solely  at our own  discretion,  that it is no longer  in our best  interest  to
continue the current  arrangements.  However,  we intend to  formalize  official
written fulfillment agreements with them as soon as practicable.

    Net revenues for our e-commerce  subsidiaries  consist of commissions earned
per  transaction  upon  shipment of products and  acceptance  of products by our
customers net of any allowance for future returns.

    We have a limited  operating  history on which to base an  evaluation of our
business and  prospects.  You must consider our prospects in light of the risks,
expenses and  difficulties  frequently  encountered  by companies in their early
stage of development, particularly companies in new and rapidly evolving markets
such as online  commerce.  To address  these  risks,  we must obtain  sufficient
operating capital,  maintain and expand our customer base,  continue to increase
our product  offerings,  successfully  implement  our  business,  marketing  and
promotional  strategies,  continue to develop our order  processing  technology,
respond to competitive  developments in the specialty food market,  and attract,
retain and motivate  qualified  personnel.  We cannot assure you that we will be
successful  in  addressing  these risks and our failure  could be harmful to our
business, prospects, financial condition and results of operations.


                                       12
<PAGE>


Internet Operations
-------------------
    Our Internet  operations  are  represented by our current  Internet  service
provider and  e-commerce  operating  subsidiaries.  Due to our change in primary
corporate  focus,  these will be the industry  segments in which we are going to
focus.  Our costs would  include  expenses  associated  with running an Internet
holding  company.  These expenses are mainly  related to the  maintenance of the
corporate  office,  payroll,  legal,  accounting,  public  relations  and  other
administrative expenses.


Three Months Ended June 30, 2000
--------------------------------

    REVENUES.  Net  revenues  for our  Internet  service  provider  subsidiaries
consist  of  services  and sales to  customers.  Revenues  are  recognized  upon
delivery of service.  Net revenues for our  e-commerce  subsidiaries  consist of
commissions  earned per transaction  upon shipment of products and acceptance of
products by our customers net of any allowance for future  returns.  Revenue for
the three  months  ended June 30, 2000 was  $386,783 of which all was related to
providing  Internet and  development  services to customers.  As a result of our
acquisition  strategy and our recent  acquisitions of Internet service providers
and e-commerce  companies,  we expect to experience strong revenue growth in the
coming years.

    COST OF  REVENUES.  Cost of  revenues  consists  primarily  of the  costs of
products  and  services  sold to  customers  and actual  outbound  shipping  and
handling  costs.  Cost of revenues  for the three months ended June 30, 2000 was
$196,719. Our cost of revenue as a percentage of sales has decreased to 51% from
56% for the 1st  quarter  of 2000  due to an  approximate  20%  decrease  in our
telecommunications costs. As a result of our acquisition strategy and our recent
acquisitions of Internet service providers and e-commerce  companies,  we expect
to have a substantial increase in our cost of revenues as our revenues increase.

    SELLING,  GENERAL AND  ADMINISTRATIVE.  Sales and marketing expenses consist
primarily of advertising  and promotional  expenditures  and payroll and related
expenses  for  personnel  engaged in sales and  marketing  activities.  Selling,
general and  administrative  expenses  were  $672,844 for the three months ended
June 30,  2000.  This  represents  an increase of $613,955  from the general and
administrative  expense  incurred for the three months ended June 30, 2000. This
increase is primarily attributable to the increase in general and administrative
personnel,  an  increase  in  corporate  expenses  as a result  of our  shift in
corporate focus and amortization of intangible assets.

    INTEREST EXPENSE.  Interest expense for the three months ended June 30, 2000
includes  amortization  of $51,202 of debt issuance  costs  associated  with the
$500,000 convertible debenture.

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<PAGE>


Six Months Ended June 30, 2000
------------------------------

    REVENUES.  Revenue for the six months  ended June 30,  2000 was  $816,387 of
which  all was  related  to  providing  Internet  and  development  services  to
customers.  As a result of our acquisition  strategy and our recent acquisitions
of Internet service providers and e-commerce companies,  we expect to experience
strong revenue growth in the coming years.

    COST OF  REVENUES.  Cost of  revenues  consists  primarily  of the  costs of
products  and  services  sold to  customers  and actual  outbound  shipping  and
handling  costs.  Cost of  revenues  for the six months  ended June 30, 2000 was
$436,385. As a result of our acquisition strategy and our recent acquisitions of
Internet  service  providers  and  e-commerce  companies,  we  expect  to have a
substantial increase in our cost of revenues as our revenues increase.

    SELLING,  GENERAL AND  ADMINISTRATIVE.  Sales and marketing expenses consist
primarily of advertising  and promotional  expenditures  and payroll and related
expenses  for  personnel  engaged in sales and  marketing  activities.  Selling,
general and  administrative  expenses were  $1,346,667  for the six months ended
June 30, 2000.  This  represents an increase of $1,242,837  from the general and
administrative  expense  incurred for the six months  ended June 30, 2000.  This
increase is primarily attributable to the increase in general and administrative
personnel,  an  increase  in  corporate  expenses  as a result  of our  shift in
corporate focus and amortization of intangible assets.

    INTEREST  EXPENSE.  Interest  expense for the six months ended June 30, 2000
includes  amortization  of $51,202 of debt issuance  costs  associated  with the
$500,000 convertible debenture.


Liquidity and capital resources
-------------------------------

    Our  business  plan has  required,  and is  expected to continue to require,
substantial capital to fund operations,  capital expenditures,  and expansion of
sales and marketing capabilities and acquisitions.

        On May  11,  2000  we  issued  two  convertible  debentures  aggregating
$500,000.  The  debentures  bear interest at 12% per annum and are due on May 1,
2001. The debentures  are  convertible  into common stock at a rate equal to the
lowest of $.70 or 60% of the average of the three  lowest  closing bid price for
the common stock during the 20 trading days immediately preceding the conversion
date. In addition,  we also issued three-year  warrants to purchase an aggregate
of  250,000  shares of common  stock at an initial  exercise  price of $0.77 per
share.  Due to the preferential  conversion  feature of these debentures we will
capitalize  $242,857 (which  represents the value of additional  shares issuable
upon  conversion  at the $.70  conversion  price  verses  the  number  of shares
issuable  upon  conversion  at the market value at the date of issuance) as debt
issuance  costs and  amortize  this amount over the term of the  debentures.  In


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<PAGE>

addition,  the  warrants  issued in  connection  with these  debentures  have an
exercise  price below the market value of the our stock on the date of issuance,
therefore  we will  capitalize  an  additional  $67,500  (which  represents  the
difference  in the market value at the date of issuance  less the $.77  exercise
price times the number of warrants  issued) of debt  issuance  costs  associated
with the issuance of the 250,000  warrants that will be amortized  over the term
of these debentures.

        We and the above  debenture  holders  have also  agreed  that,  upon the
declaration of effectiveness of the Registration  Statement to be filed pursuant
to the  Registration  Rights  Agreement,  provided that the trading price of the
Common  Stock  is at  least  $1.00  for the ten (10)  consecutive  trading  days
immediately  preceding  the  Effective  Date,  the  debenture  holders  will  be
obligated  to  purchase,  and we shall  be  obligated  to sell and  issue to the
debenture holders,  additional  debentures in the aggregate  principal amount of
Five  Hundred  Thousand  ($500,000)  and  additional  warrants  to  purchase  an
aggregate of 250,000  shares of Common Stock for an aggregate  purchase price of
Five Hundred Thousand Dollars  ($500,000),  with the closing of such purchase to
occur within thirty (30) days of the Effective Date. The terms of the Additional
Debentures  and the  Additional  Warrants shall be identical to the terms of the
Debentures  and the  Warrants  as  described  above,  provided  that the Initial
Conversion  Price (as defined in the Debentures)  for the Additional  Debentures
shall be seventy-seven hundredths of one dollar ($.77).

    We believe that our existing cash and cash  equivalents,  will be sufficient
to meet our working capital and capital  expenditure  requirements  for at least
the next 12 months. Additional financing may not be available when needed or, if
available,  such financing may not be on terms favorable to our  shareholders or
us. If such sources of  financing  are  insufficient  or  unavailable,  or if we
experience  shortfalls  in  anticipated  revenue  or  increases  in  anticipated
expenses,  we may need to slow  down or stop  the  expansion  of our  e-commerce
business,  including our ISPs and reduce our marketing and development  efforts.
Any of these events could harm our business,  financial  condition or results of
operations.


Impact of Year 2000
-------------------
The Company  instituted a comprehensive  program to address  potential Year 2000
impacts and as a result,  critical systems and infrastructure  operated smoothly
through the  arrival of Year 2000 and leap year  boundaries.  Additionally,  the
Company  experienced  no Year  2000  related  disruptions  in the  products  and
services  provided by its significant  suppliers or other  third-party  business
relationships.  Many of the  improvements  made in preparation for the Year 2000
are expected to provide the Company with long-term benefits.


                                       15
<PAGE>

Forward looking statements
--------------------------
This report contains certain  forward-looking  statements  within the meaning of
Section 27A of the  Securities  Act of 1933, as amended,  and Section 21E of the
Securities Exchange Act of 1934, as amended. Stockholders are cautioned that all
forward-looking  statements  involve risks and  uncertainty,  including  without
limitation,  the ability of us to install new kiosks, general market conditions,
and competition and pricing.  Although we believe the assumptions underlying the
forward-looking   statements  contained  herein  are  reasonable,   any  of  the
assumptions could be inaccurate,  and therefore,  there can be no assurance that
the  forward-looking  statements  contained  in  the  report  will  prove  to be
accurate.



Part II. OTHER INFORMATION

Item 1.  Legal Proceedings

     None


Item 2.  Change in Securities and Use of Proceeds

     None


Item 3.  Defaults Upon Senior Securities

     None


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

     Not applicable


Item 5.  Other Information

     Not applicable

Item 6.  Exhibits and Reports on Form 8-K

     (a) Exhibits

         27.1 - Financial Data Schedule


     (b) Reports on Form 8-K

     None



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<PAGE>




                                   SIGNATURES

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

                              SITESTAR CORPORATION


                          By:  /s/ Frederick T. Manlunas
                              ------------------------------
                              Frederick T. Manlunas
                              Chairman of the Board


Date:  August 14, 2000


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