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

                                   Form 10-KSB

            [x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 1997


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


                         Commission File Number 0-26886


                             INTERNET HOLDINGS, INC.
               (Exact name of Company as specified in its charter)


               Utah                                          13-3758042
  (State or other jurisdiction of                         (I.R.S. Employer
  incorporation or organization)                       Identification Number)


c/o      Beckman, Millman & Sanders, LLP
         116 John Street - Suite 1313
         New York, New York                                    10038
         (Address of principal executive offices)            (Zip Code)


Company's telephone number, including area code:          (212) 406-4700

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

Securities registered under Section 12(g) of the
Exchange Act:                                              None

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) had been subject to such filing requirements
for the past 90 days.                                      Yes [_]   No [X]

Check if there is no disclosure of delinquent filers
in response to Item 405 of Regulation S-B contained in
this form, and no disclosure will be contained, to the
best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part
III of this Form 10-KSB or any amendment to this Form
10-KSB                                                                  [X]

State issuer's revenue for its most recent fiscal year:    $ 3,813

State the  aggregate  market  value of the voting stock
held by  non-affiliates  computed by  reference  to the
price at which the stock was sold,  or the  average bid
and asked price of such  stock, as of a  specified date
within the past 60 days:                                  $ 397,400 as of
                                                          December 22, 1997

State the number of shares  outstanding  of each of the
Registrant's  classes of common equity as of the latest
practicable date:                                        2,119,470 shares as
                                                         of Common Stock
                                                         as of December 31, 1997

<PAGE>

                                     PART I


Item 1.  Description of Business

     On  May  22,  1997,   Internet   Holdings,   Inc.  (the  "Company"  or  the
"Registrant")  acquired all the issued capital of Chiron  Systems Ltd.  ("CSL").
CSL was an English  company  engaged in the business of designing and developing
Integrated  Services Digital Network ("ISDN")  related  products.  The Company's
wholly owned subsidiary,  CSL, was acquired in exchange for 2,640,313 restricted
shares of the Company's  common stock. The formation of CSL was as a result of a
management  buy-out from GEC-Plessey  Telecommunications  ("GPT") in 1993. Under
the  terms of the  1993  buyout,  CSL was  transferred  the  rights  to  certain
technology developed by GPT.

     During 1997, the Company was engaged in the business of providing  hardware
and software products and services for Internet and ISDN  applications.  CSL has
been one of the leading  suppliers  of ISDN  converters  (Anatel 4000 range) and
ISDN  termination  points  (SAT 100 range) in Europe.  Since its launch in 1996,
these products have been used by three European PTTs and have been placed on the
bidding  list for several  more.  CSL  expected to confirm  several  substantial
orders  from  Europe,  the Far East and Africa  during the last  quarter of 1997
based upon a new range of  products.  These orders  never  materialized  and the
Malaysian joint venture  partners  subsequently  alleged to the Company that the
new range of products designed by CSL could not meet certain requirements.

     Following this, the Company  undertook a major review of the management and
products  of CSL.  During this  period,  CSL's  management  refused to allow the
Company's  auditors  access to  certain  management  and  financial  information
concerning  CSL.  The  management  of CSL stated  that they could  complete  the
development of the new range of products but that this would require  another $1
million,  in addition to the funds already  spent.  Further,  at this time CSL's
bankers indicated that they required an unconditional guarantee from the Company
to secure all of CSL's  indebtedness of approximately  $700,000.  Continuing the
sale of the  existing  products  indefinitely  was not an option  as they  would
become uncompetitive and relied on chipsets which were to be discontinued.

     As a result of these events,  the Company concluded that the only course of
action open to it was to exercise its right to divest CSL under the terms of the
acquisition agreement.  Central to this decision was a belief that the new range
of  products  under  development  by CSL would  not now  reach  the  market in a
competitive   time-scale  and  even  then  might  require  further   substantial
development work.

     Accordingly,  the Company  divested CSL with effect from December 19, 1997,
pursuant to the  acquisition  agreement  dated May 22, 1997 and the  Agreement &
Plan of Divestiture  dated  December 19, 1997. The structure of the  divestiture
was that the Company  delivered to certain  shareholders  of the Company who had
previously  owned CSL all the  outstanding  shares in CSL. The CSL  shareholders
returned  to the Company  the shares  held by them  pursuant to the  acquisition
agreement.




                                      -1-
<PAGE>

     On July 28, 1998, CSL's creditors placed CSL into liquidation.  As a result
of the  collapse and  insolvency  of CSL, the Company was advised by its lawyers
that any rights it may have had under the acquisition agreement against CSL were
not worth  pursuing  because  even if a  judgment  were  obtained,  there was no
prospect of any payment being made to the Company.

     As a result of this  divestiture  and the  failure of CSL,  the Company was
unable to deliver  products and technology as contracted  under  agreements with
its joint venture partners.  This failure led to legal proceedings.  The Company
countercharged  that the assets  purchased by it from its joint venture partners
had not been  effectively  transferred.  During  the  period  September  1997 to
November  1999 the Company  was unable to raise  funds to develop its  business,
unable to settle the outstanding  litigation  relating to its joint ventures and
had its indebtedness  been demanded the Company would have been unable to repay.
In November  1999,  the Company  finally  settled  these legal  proceedings  and
entered into a  comprehensive  settlement  agreement.  The  adjudication of this
matter enabled the Company to move forward. By this agreement the Company agreed
not to pursue claims  against  certain  assets  purchased from the joint venture
partners,  the joint venture  partners  agreed not to pursue claims  against the
Company  for  alleged  negligence  and breach of  contract  and the  Company was
released  from debts  totaling  approximately  $300,000.  This resulted in a net
write off to the Company of $1.9 million.

     Following  the  planned  appointment  of  additional   management  and  the
settlement of the legal  proceedings  the Company can now proceed to rebuild its
business.

General

     For most of 1997 the Company operated its business through its wholly owned
subsidiary  CSL. CSL was founded in March 1993 with the  acquisition of a set of
ISDN products and technology from GEC Plessey Telecommunications ("GPT"). GPT is
one of the  largest  telecommunications  companies  in the  world.  In 1993  GPT
elected  to move  out of the  ISDN  peripherals  market.  All  this  technology,
representing  in excess of $7 million in research and  development  expenditure,
was transferred through a management buyout to CSL.

     At the time of the  acquisition of CSL by the Company the original range of
products were selling well and had in the past been among the best technology on
the market.  However,  technology  markets move extremely fast and CSL had a new
range of products under  development to meet the advancing  market  requirements
and the  discontinuation  of existing  chip  supplies thus meaning CSL could not
continue indefinitely with the existing products.

     During  negotiations  for  sub-contract   manufacture  with  the  Company's
Malaysian joint venture partners it emerged that the new range of products might
not meet the required  specifications  in terms of cost,  performance and, time.
This led to the review of CSL set out above and its subsequent divestiture.


                                      -2-
<PAGE>

Marketing

     CSL  primarily  sold  its  products  to  major  telecommunications  network
operators  such as British  Telecom,  Belgacom and the  Netherlands  PTT.  These
companies then sell the products to end-users.

     In order to expand the market for CSL's  products the Company  entered into
joint ventures in Asia and Africa.

Employees

     As of December 31, 1997,  following the divestiture of CSL, the Company had
one full time employee.


Item 2. Description of Property

     During the period of ownership of CSL, the Company operated  primarily from
CSL's  executive  offices  in  Reading,  England  located  in  leased  space  of
approximately 2,000 square feet in a multi-tenant office building.  The lease is
on an annual basis and commenced in 1993.

     Currently  the Company  maintains a facility for meetings at the offices of
its corporate counsel Beckman, Millman & Sanders LLC.


Item 3. Legal Proceedings


     During the period of the  Company's  ownership of CSL, in addition to other
matters, the Company devoted considerable  resources to expanding the market for
CSL's products in Asia and Africa.  Both these regions  possess  rapidly growing
markets where there is substantial demand for new telephony technology.

     The  efforts in these new  markets  were  extremely  successful  with joint
ventures being agreed in both Asia and Africa.  However, the collapse of CSL and
the  consequent  inability of the Company to supply  products or  technology  to
either  joint  venture  left the  Company  exposed to  allegations  of breach of
contract.

     The outstanding  legal  proceedings have prevented the Company from raising
funds to continue its business.


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

None


                                      -3-
<PAGE>

                                     PART II

Item 5. Market for Common Equity and Related Stockholder Matters

     The Company's Common Stock has been traded on the Over-The-Counter Bulletin
Board (OTC-  Bulletin  Board) since July 22, 1977 and is currently  traded under
the symbol  "HTTP".  The following are reported high and low  quotations for the
Company's Common Stock for the periods  indicated and do not include dealer mark
ups, mark downs or commissions nor do they represent actual sale prices:

                                    Low                       High
First Quarter 1997                    1/4                       5/8
Second Quarter 1997                 5 1/2                     7
Third Quarter 1997                  3                         7
Fourth Quarter 1997                   1/8                     5 5/8



Item 6. Management's Discussion and Analysis of Financial Condition and Results
        of Operations

Liquidity and Sources of Capital

     As of December 31, 1997,  the  Registrant  had current assets of $35,600 as
compared to $ 0 as of December 31, 1996. On October 27, 1999 the Company filed a
Form 8-K setting out a  contingent  acquisition  which,  if  consummated,  would
provide  the  Company  with  $2,160,000  in cash  and  liquid  securities.  This
agreement is conditional on the settlement of all  outstanding  litigation,  the
filing of outstanding  periodic and annual reports under the Securities Exchange
Act of 1934, as amended,  and the maintenance of the Company's  quotation on the
OTC -  Bulletin Board.


Results of Operations

     On May 22, 1997, the Company  acquired 100% of Chiron Systems Ltd.  ("CSL")
to exploit  certain of the  company's  Internet  related  technologies.  CSL was
acquired by the  Company in  exchange  for  2,640,313  shares of its  restricted
shares of common stock.

     With effect from December 19, 1999 the Company divested CSL pursuant to the
acquisition  agreement  dated May 22,  1997  whereby the  Company  delivered  to
certain  shareholders who had previously owned CSL all the outstanding shares in
CSL.  The CSL  shareholders  returned  to the  Company  the shares  held by them
pursuant to the acquisition agreement.

     In the  accompanying  accounts  the  Company  treats  CSL  as  discontinued
operations.


                                      -4-
<PAGE>

Item 7. Financial Statements

Reference is made to the financial statements attached hereto.


Item 8. Changes In and Disagreements With Accountants on Accounting and
        Financial Disclosure

None



                                      -5-
<PAGE>


                                    PART III

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

     Christopher  J.  Wilkes,  aged 33,  became a  Director  of the  Company  on
September 30, 1996.  Mr. Wilkes also holds the offices of Chairman and President
of the  Company.  He holds  these  offices and  positions  until the next annual
meeting  of  the  Company.  Mr.  Wilkes  is the  Senior  Partner  of  Levenworth
Management,  a management consulting company based in the United Kingdom,  which
he founded  in 1992.  He has  advised on the  restructuring  and  operations  of
companies  in  a  number  of  different  industries  and  has  an  international
clientele.

     Lewis M. Klee,  aged 44,  became a Director of the Company on September 30,
1996. Mr. Klee also holds the office of Secretary of the Company. Mr. Klee is no
longer a director of the Company. On August 1, 1996 Mr. Klee became the Managing
Partner of the Law Office of Lewis M. Klee Esq., prior to this he was of counsel
to the Law Office of Steven A. Sanders P.C.


Item 10. Executive Compensation

     Mr. Wilkes was paid  consultancy  fees of $23,877  during 1997 and received
Common  Stock  to the  value  of  $59,697  in lieu  of  fees.  Mr Klee  received
consultancy  and legal fees of $19,000 during 1997 and received  Common Stock to
the value of $12,450 in lieu of fees.


Item 11. Security Ownership of Certain Beneficial Owners and Management

     The  following  table sets forth  information  with  respect to  beneficial
ownership  of  Common  Stock by (i) each  person  known  by the  Company  to own
beneficially more than five percent (5%) of the outstanding  Common Stock of the
Company, (ii) each director of the Company, and (iii) all directors and officers
of the Company as a group.  Except as other wise  indicated the named person has
sole voting and investment power with respect to such person's shares.

                                      Number of Common shares
Name                                  Beneficially owned             Percent

Christopher J. Wilkes                         253,304                  11.9%
President & Director
22 Parrotts Field
Hoddesdon
Hertfordshire EN11 OQU
United Kingdom

Lewis M. Klee                                  25,000                   1.2%
Secretary
The Law Office of Lewis M. Klee,
40 Exchange Place, 8th Floor
New York, NY 10005


All executive officers and directors
As a group:                                   278,304                  13.1%


                                      -6-
<PAGE>

Item 12. Certain Relationships and Related Transactions



Item 13. Exhibits and Reports on Form 8-K

          a)   Exhibit 1 - Agreement and Plan of  Divestiture  between  Internet
               Holdings, Inc. and Chiron Systems Ltd. dated December 19, 1997.


          b)   The  Registrant  did not file any  reports on Form 8-K for events
               which occurred during the year ended December 31, 1997.




                                      -7-
<PAGE>


SIGNATURES

     In accordance  with the  requirements  of the Exchange Act, the  Registrant
caused this  report to be signed on behalf by the  undersigned,  thereunto  duly
authorized.

                                            Internet Holdings, Inc.

Date: December 13, 1999                     /s/ Christopher Wilkes
                                            ----------------------
                                            Christopher J. Wilkes
                                            President






                                      -8-
<PAGE>





                             INTERNET HOLDINGS, INC.
                              FINANCIAL STATEMENTS
                        AS OF DECEMBER 31, 1997 and 1996
                         TOGETHER WITH AUDITORS' REPORT













<PAGE>




                          INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Stockholders of
  Internet Holdings, Inc.:

     We have audited the accompanying  balance sheet of Internet Holdings,  Inc.
(the  "Company"),  as of  December  31,  1997,  and the  related  statements  of
operations, stockholders' equity and cash flows for the years ended December 31,
1997  and  1996.  These  financial  statements  are  the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements based on our audits.

     Except as discussed in the following paragraph,  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 financial  statements are free of material  misstatement.  An audit includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial  statements.  An audit also  includes  assessing  the  accounting
principles  used  and  significant  estimates  made  by  management,  as well as
evaluating the overall  financial  statement  presentation.  We believe that our
audits provide a reasonable basis for our opinion.

     We were unable to audit the financial  statements of Chiron Systems Ltd. (a
former wholly-owned  subsidiary of the Company in England, the "Subsidiary") for
the period from May 22, 1997 to December 19, 1997.  Furthermore,  we were unable
to audit certain joint venture  transactions  in Asia and Africa during the year
ended  December 31, 1997.  The  activities of the  Subsidiary and joint ventures
comprised  substantially  all of the Company's  operations during the year ended
December  31,  1997.  Because  of  the  significance  of the  operations  of the
Company's Subsidiary and joint ventures which we were unable to audit, the scope
of our work was not  sufficient to enable us to express,  and we do not express,
an opinion on the 1997 financial statements. In our opinion, with respect to the
1996 financial  statements,  the financial  statements referred to above present
fairly,  in all material  respects,  the results of operations and cash flows of
Internet Holdings,  Inc. for the year ended December 31, 1996 in conformity with
generally accepted accounting principles.

     The accompanying  financial statements have been prepared assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 1 to the
financial statements,  the Company presently has no revenue producing operations
or activities and has suffered  recurring losses from operations.  These factors
raise  substantial  doubt  about the  Company's  ability to  continue as a going
concern.  Management's  plans in regard to these  matters are also  described in
Note 1. The  financial  statements  do not  include any  adjustments  that might
result from the outcome of this uncertainty.



                                                  /s/   CALLAGHAN NAWROCKI LLP
                                                  ----------------------------
                                                  CALLAGHAN NAWROCKI LLP

Melville, New York
December 1, 1999

                                       F-1



<PAGE>


                             INTERNET HOLDINGS, INC.
                                  BALANCE SHEET
                                DECEMBER 31, 1997




                               ASSETS

CURRENT ASSETS:
  Cash                                                              $     1,600
  Other receivable                                                       34,000
                                                                    -----------

               Total current assets                                      35,600
                                                                    -----------

                                                                    $    35,600
                                                                    ===========

                          LIABILITIES AND
                         STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Accounts payable and accrued expenses                             $    20,380
                                                                    -----------

               Total current liabilities                                 20,380
                                                                    -----------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
  Common stock, $.001 par value, 50,000,000 shares
    authorized, 2,119,470 shares issued and outstanding                   2,119
  Additional paid-in capital                                          5,723,560
  Accumulated deficit                                                (5,710,459)
                                                                    -----------

               Total stockholders' equity                                15,220
                                                                    -----------

                                                                    $    35,600
                                                                    ===========





                 The accompanying notes to financial statements
                     are an integral part of this statement.

                                       F-2


<PAGE>




                             INTERNET HOLDINGS, INC.
                            STATEMENTS OF OPERATIONS
                 FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996





                                                           1997            1996
                                                    -----------     -----------

REVENUES                                            $     3,813     $      --

EXPENSES                                                130,974         214,851
                                                    -----------     -----------

          Loss from continuing operations              (127,161)       (214,851)

LOSS FROM DISCONTINUED OPERATIONS                    (2,359,612)       (161,241)
                                                    -----------     -----------

          Net loss                                  $(2,486,773)    $  (376,092)
                                                    ===========     ===========


PER SHARE DATA:

          Loss from continuing operations           $     (0.07)    $     (0.16)
                                                    ===========     ===========

          Loss from discontinued operations         $     (1.30)    $     (0.13)
                                                    ===========     ===========

          Net loss                                  $     (1.37)    $     (0.29)
                                                    ===========     ===========

          Weighted average number of common
            shares outstanding                        1,813,706       1,308,656
                                                    ===========     ===========







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

                                       F-3


<PAGE>



                             INTERNET HOLDINGS, INC.
                       STATEMENTS OF STOCKHOLDERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996

<TABLE>
<CAPTION>
                                                                                                        Accumulated
                                                                                                           Foreign        Total
                                                    Common Stock            Additional                    Currency     Stockholders'
                                              --------------------------      Paid-In      Accumulated    Translation     Equity
                                                 Shares         Amount        Capital        Deficit      Adjustment     (Deficit)
                                              ------------    ----------    -----------    -----------    ----------    -----------
<S>                                              <C>          <C>           <C>            <C>            <C>           <C>
BALANCE, JANUARY 1, 1996                         5,560,343    $    5,560    $11,541,259    $(2,847,594)   $  (84,049)   $ 8,615,176

5 to 1 reverse stock split                      (4,447,479)       (4,447)         4,447           --            --             --
Shares cancelled pursuant to divestiture          (540,006)         (540)    (8,777,600)          --          84,049     (8,694,091)
Shares issued in satisfaction of obligations     1,125,000         1,125        383,375           --            --          384,500
Net loss for the year                                 --            --             --         (376,092)         --         (376,092)
                                              ------------    ----------    -----------    -----------    ----------    -----------

BALANCE, DECEMBER 31, 1996                       1,697,858         1,698      3,151,481     (3,223,686)         --          (70,507)

8 to 1 reverse stock split                      (1,484,603)       (1,485)         1,485           --            --             --
Shares issued pursuant to acquisition            2,640,313         2,640        657,360           --            --          660,000
Shares issued in satisfaction of obligations       150,000           150         37,350           --            --           37,500
2 to 1 reverse stock split                      (1,501,180)       (1,501)         1,501           --            --             --
Shares issued in private placement               1,483,935         1,484      2,373,516           --            --        2,375,000
Shares issued pursuant to conversion
  of loan note                                     250,000           250        124,750           --            --          125,000
Shares cancelled pursuant to divestiture        (1,320,157)       (1,320)      (658,680)          --            --         (660,000)
Shares issued in satisfaction of obligations       203,304           203         34,797           --            --           35,000
Net loss for the year                                 --            --             --       (2,486,773)         --       (2,486,773)
                                              ------------    ----------    -----------    -----------    ----------    -----------

BALANCE, DECEMBER 31, 1997                       2,119,470    $    2,119    $ 5,723,560    $(5,710,459)   $     --      $    15,220
                                              ============    ==========    ===========    ===========    ==========    ===========
</TABLE>


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

                                       F-4


<PAGE>


                             INTERNET HOLDINGS, INC.
                            STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996

<TABLE>
<CAPTION>
                                                                  1997           1996
                                                               -----------    -----------
<S>                                                            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                                       $(2,486,773)   $  (376,092)
Adjustments to reconcile net loss to net cash
  used by operating activities:
    Loss from discontinued operations                            2,359,612        161,241
    Operating expenses satisfied by issuance of common stock          --          218,000
    Increase in other receivable                                   (34,000)          --
    Decrease in accounts payable,
      accrued expenses and other liabilities                       (87,239)        (4,638)
                                                               -----------    -----------

      Net cash used by operating activities                       (248,400)        (1,489)
                                                               -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
Shares issued in private placement                               2,375,000           --
Proceeds from convertible loan note                                125,000           --
                                                               -----------    -----------

      Net cash provided by financing activities                  2,500,000           --
                                                               -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in joint venture                                     (2,250,000)          --
                                                               -----------    -----------

      Net cash used by investing activities                     (2,250,000)          --
                                                               -----------    -----------

NET INCREASE (DECREASE) IN CASH                                      1,600         (1,489)

CASH, BEGINNING OF YEAR                                               --            1,489
                                                               -----------    -----------

CASH, END OF YEAR                                              $     1,600    $      --
                                                               ===========    ===========

NON-CASH INVESTING AND FINANCING ACTIVITIES:
Corporation acquired by issuance of common shares              $   660,000    $      --
Corporations divested by cancellation of common shares            (660,000)    (8,694,091)
Shares issued in satisfaction of other obligations                  72,500        384,500
Shares issued pursuant to conversion of
  loan note                                                        125,000           --
</TABLE>


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

                                       F-5


<PAGE>


                             INTERNET HOLDINGS, INC.
                          NOTES TO FINANCIAL STATEMENTS


(1)  Business and organization

     Internet Holdings,  Inc. (the "Company") was originally incorporated in the
     State  of Utah on July  22,  1977,  under  the  name of  Western  Corn  Dog
     Factories.  The Company has had a series of mergers  with other  companies,
     all  accounted for as reverse  acquisitions,  with the Company in each case
     changing  its name to that of or similar to the reverse  acquiror.  In this
     regard,  the Company's  previous names were:  Resources West,  Inc.,  Magma
     Resources, Inc., Cellular Telecommunications & Technologies, Inc. and China
     Biomedical Group, Inc. The name Internet Holdings, Inc. was adopted on July
     12, 1996.

     In 1993,  the  Company  acquired  Cellular  Payphones,  Inc.,  ("CPI"),  (a
     Delaware Corporation),  whereby all of the issued and outstanding shares of
     CPI were  exchanged  for  approximately  90% of the issued and  outstanding
     stock of the  Company.  This  transaction  was  accounted  for as a reverse
     acquisition purchase, in which CPI was the acquiring  corporation,  and the
     Company  was the  acquired  corporation.  The  Company  accounted  for this
     transaction  as a  recapitalization  of CPI, with the issuance of 2,625,000
     shares of common  stock for the net assets of the  Company.  Following  the
     1993  acquisition,   the  Company  was  engaged  in  the  business  of  (i)
     installation  and  servicing  of cellular  credit-card  pay  telephones  in
     taxicabs, radio-cabs, limousines, rental cars, trains, ferries, hotels, and
     business conference  centers,  and (ii) the data processing and development
     of streamline software specializing in credit card authorization processing
     with real-time  billing  functions.  The Company ceased such  operations in
     October  1994 due to  substantial  losses.  Effective  April 3,  1995,  the
     Company acquired C.B.  Marketing and Investment  Limited,  a privately-held
     English  corporation engaged in the business of medical market research and
     the  manufacture  of  pharmaceuticals  and  contraceptives  in the Peoples'
     Republic  of  China.  On  April  22,  1996,  the  Company  entered  into  a
     divestiture  agreement  with  respect  to  C.B.  Marketing  and  Investment
     Limited. During 1996, the Company was reorganized to invest in internet and
     ISDN ("International Standard Digital Network") related technologies.

     On May 22,  1997,  the Company  acquired  Chiron  Systems Ltd.  ("CSL"),  a
     privately-held English Corporation engaged in the business of designing and
     developing  ISDN related  products.  During 1997, the Company,  through CSL
     provided  hardware and software products and services for internet and ISDN
     applications.  CSL had expected to confirm several  substantial orders from
     the Far East  during  the last  quarter  of 1997  based upon a new range of
     products.   However,   these  orders  never  materialized  due  to  alleged
     specification  failure,  resulting in a need for  additional  funding.  The
     Company  decided not to make any further  investment in CSL and,  effective
     December 19, 1997, exercised its right to divest CSL under the terms of the
     acquisition agreement.  CSL was subsequently placed into liquidation by its
     creditors.  During its  ownership  of CSL,  the  Company  invested in joint
     ventures  in Asia and West  Africa  in  connection  with  the  delivery  of
     products and services being developed by CSL. As a result of the failure of
     CSL to develop the requisite products and technology, and the corresponding
     divestiture of CSL, the Company became engaged in various legal proceedings
     with its joint venture partners which was finally settled in October 1999.


                                       F-6
<PAGE>

     The Company presently has no revenue producing operations or activities and
     has suffered  recurring losses from operations.  Management's plans include
     seeking an  acquisition  candidate in the  internet and related  technology
     fields.  In  connection  with such a  transaction,  which,  similar  to the
     Company's  previous  mergers will  actually be a reverse  acquisition,  the
     Company  may seek to raise  proceeds  from the sale of its  securities.  On
     October  27, 1999 the  Company  filed a Form 8-K  setting out a  contingent
     acquisition   which,  if  consummated,   would  provide  the  Company  with
     $2,160,000 in cash and liquid securities.  This agreement is conditional on
     the  settlement of all  outstanding  litigation,  the filing of outstanding
     reports  and  the  maintenance  of the  Company's  quotation  on the  OTC -
     Bulletin Board.

(2)  Summary of significant accounting policies:

     Foreign currency translation -

     Gains and losses  from  foreign  currency  transactions  are  reflected  in
     current  operating  results.   Exchange  adjustments   resulting  from  the
     translation  of  financial  statements  have been  reflected  as a separate
     component of stockholders' equity. The cumulative adjustment was eliminated
     upon the divestiture of foreign operations.

     Revenue and cost recognition -

     Revenues are  generally  recognized  as earned and expenses are  recognized
     when incurred under the accrual basis of accounting.

     Net loss per share -

     Net loss per  share  was  computed  by  dividing  net loss by the  weighted
     average number of common shares issued and outstanding during the period.

     Income taxes -

     The Company has adopted  Statement of Financial  Accounting  Standards  No.
     109,  "Accounting for Income Taxes",  to account for deferred income taxes.
     Deferred taxes are computed based on the tax liability or benefit in future
     years of the reversal of temporary differences in the recognition of income
     or deduction of expenses between financial and tax reporting purposes.  The
     net difference, if any, between the provision for taxes and taxes currently
     payable is reflected in the balance sheet as deferred  taxes.  Deferred tax
     assets and/or liabilities, if any, are classified as current and noncurrent
     based on the classification of the related asset or liability for financial
     reporting  purposes,  or based on the expected  reversal  date for deferred
     taxes that are not related to an asset or liability.

(3)  Discontinued operations

     On  December  19,  1997,  the  Company's  Board  of  Directors  approved  a
     divestiture agreement whereby the Company delivered to certain shareholders
     who had previously  owned Chiron Systems Ltd.,  ("CSL") all the outstanding
     shares in this  corporation,  which had been acquired by the Company on May
     22,  1997.  In return,  the CSL  shareholders  transferred  to the  Company
     1,320,157  shares  (2,640,313  shares  pre-reverse  split) of the Company's
     common stock. In connection  therewith,  the Company recognized $361,641 of
     losses  relating  primarily to  unrecoverable  loans  receivable  from this
     divested corporation.


                                       F-7

<PAGE>

     In  conjunction  with its ownership of CSL, the Company  entered into joint
     ventures in Asia and West Africa for the  delivery of products and services
     being  developed  by CSL.  During the year ended  December  31,  1997,  the
     Company invested  $2,250,000 in certain assets purchased from joint venture
     partners.  As a result  of the  failure  of CSL to  develop  the  requisite
     products and  technology,  and the  corresponding  divestiture  of CSL, the
     Company became engaged in various legal  proceedings with its joint venture
     partners. In October 1999, a comprehensive settlement agreement was reached
     by the Company with its joint  venture  partners.  By this  agreement,  the
     Company agreed not to pursue claims against  certain assets  purchased from
     the joint venture partners, the joint venture partners agreed not to pursue
     claims  against the Company  relating to negligence  and breach of contract
     and the Company was released from debts totalling  $252,029.  This resulted
     in a net  write-off to the Company of  $1,997,971,  which is reflected as a
     loss from discontinued operations for the year ended December 31, 1997.

     On April 22,  1996,  the  Company's  stockholders  approved  a  divestiture
     agreement  whereby the Company  delivered to certain  shareholders  who had
     previously owned C.B.  Marketing and Investment  Limited (the "Subsidiary")
     all the  outstanding  shares  in this  corporation.  In  return,  the  C.B.
     Marketing and Investment  Limited  shareholders  transferred to the Company
     540,006 shares (2,700,000 shares pre-reverse split) of the Company's common
     stock.  Accordingly,  the assets and  liabilities  of the  Subsidiary as of
     December 31, 1995 were restated as net assets of  discontinued  operations,
     and the operating  results for the Subsidiary have been reflected as a loss
     from discontinued operations for all periods presented.

(4)  Accounts payable and accrued liabilities

     As of December 31, 1997,  accounts payable and accrued  liabilities consist
     primarily of obligations for legal and professional fees.

(5)  Stockholders' equity

     On January 27,  1996,  the Board of  Directors  approved a 1-for-5  reverse
     stock split of the issued and  outstanding  shares of the Company's  common
     stock.

     On April 22,  1996,  the  Company's  stockholders  approved  a  divestiture
     agreement  whereby the Company  delivered to certain  stockholders  who had
     previously owned C.B.  Marketing and Investment Limited all the outstanding
     shares in this corporation.  In return,  the C.B.  Marketing and Investment
     Limited  shareholders  transferred to the Company 540,006 shares (2,700,000
     shares  pre-reverse  split) of the Company's common stock. Such shares were
     immediately canceled.

     On April 25, 1996,  the Board of Directors  approved the issuance of 59,000
     shares of the Company's  common stock in satisfaction of obligations in the
     amount of $118,000.

     On July 3, 1996, the Board of Directors  approved the issuance of 1,066,000
     shares of the Company's  common stock in satisfaction of obligations in the
     amount of $266,500.

     On March 11, 1997, the Board of Directors  approved a 1-for-8 reverse stock
     split of the issued and outstanding shares of the Company's common stock.



                                       F-8


<PAGE>

     On May 22, 1997, the Company acquired Chiron Systems Ltd., a privately-held
     English  Corporation  in a  stock-for-stock  exchange.  As a result of such
     transaction,  the Company  issued  2,640,313  shares of its  authorized but
     unissued  common  stock to the  shareholders  of  Chiron  Systems  Ltd.  On
     December 19, 1997 the Company  exercised its right to divest Chiron Systems
     Ltd., under the terms of the acquisition agreement. Accordingly,  1,320,157
     (post 1-for-2  reverse stock split) shares were returned to the Company and
     immediately cancelled.

     On May 22, 1997,  the Board of  Directors  approved the issuance of 150,000
     shares of the Company's  common stock in satisfaction of obligations in the
     amount of $37,500.

     On June 9, 1997,  the Board of Directors  approved a 1-for-2  reverse stock
     split of the issued and outstanding shares of the Company's common stock.

     On June 20, 1997,  the Company sold pursuant to a private  placement  under
     Regulation S, 1,483,935  shares of common stock for proceeds of $2,375,000.
     The proceeds are net of $147,689 of placement costs.

     On August 12,  1997,  250,000  shares of the  Company's  common  stock were
     issued pursuant to the conversion of a loan note in the amount of $125,000.

     On December  19,  1997,  the Board of  Directors  approved  the issuance of
     203,304 shares of the Company's common stock in satisfaction of obligations
     in the amount of $35,000.

(6)  Income taxes

     The income tax  provision  is  summarized  as follows  for the years  ended
     December 31, 1997 and 1996:


                                          Year Ended           Year Ended
                                       December 31, 1997    December 31, 1996
                                       -----------------    -----------------

Federal                                   $     --              $     --
State and local                                 --                    --
                                          ----------            ----------
      Total                               $     --              $     --
                                          ==========            ==========

Statutory rates of income tax                     40%                   43%
Income tax effect related to the
  following items:

Net operating losses                             (40)                  (43)
                                          ----------            ----------
      Total                                     --                    --
                                          ==========            ==========

Effective rate of income tax                       0%                    0%
                                          ==========            ==========

     The Company has net operating loss  carryforwards  to offset future taxable
     income of approximately $5 million expiring in the years 2008 through 2012.
     As it is not more likely than not that the resulting  deferred tax benefits
     will be  realized,  a  valuation  allowance  has been  recognized  for such
     deferred tax assets.

                                       F-9



<PAGE>

(7)  Commitments and contingencies

     The Company has not filed federal nor state income tax returns for the past
     several years,  and is currently  working with the Internal Revenue Service
     and state taxing authorities to ensure filings of all requisite returns are
     made as soon as possible.  In management's  opinion,  there are no material
     liabilities as a result of the delay in filing these returns.

(8)  Legal proceedings and subsequent events

     During  the  period   subsequent  to  December  31,  1997,   various  legal
     proceedings  were  settled.  Reference  is made to Note 3 for details as to
     such resolution.













                                      F-10