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

                                   FORM 10-KSB

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

For the Fiscal Year Ended December 31, 1999.       Commission File No. 0-28720.

                            SALES ONLINE DIRECT INC.
              ----------------------------------------------------
              (Exact name of small business issuer in its charter)

         Delaware                                         73-1479833
         --------                                         ----------
(State or Other Jurisdiction                (I.R.S. Employer Identification No.)
 of Incorporation or Organization)

                4 Brussels Street, Worcester, Massachusetts 01610
                -------------------------------------------------
                (Address of principal executive office)(Zip Code)

         Issuer's Telephone Number, Including Area Code: (508) 753-0945
          (Securities registered pursuant to Section 12(b) of the Act)

                         Common Stock, $0.001 Par Value
                         ------------------------------
                              (Title of each class)

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
                                          ---

Check if there is no  disclosure of  delinquent  filers  pursuant to Item 405 of
Regulation  S-B is not  contained  on  this  Form,  and no  disclosure  will  be
contained,  to the best of the  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 revenues for its most recent fiscal year: $1,003,200.

As of March 24, 2000, the registrant had  outstanding  47,056,140  shares of its
Common  Stock,  par value of $0.001,  its only class of voting  securities.  The
aggregate  market value of the shares of common stock of the registrant  held by
non-affiliates on March 24, 2000 was approximately  $25,868,989 based  upon  the
average over the counter  sales price of $2.625 per share on such date (See Item
5).

                       DOCUMENTS INCORPORATED BY REFERENCE

Specified portions of the registrant's  definitive Information Statement for the
2000 Annual Meeting of Stockholders are incorporated by reference in Part III of
this Report.

<PAGE>

                                TABLE OF CONTENTS


                                                                            PAGE
                                                                            ----

                            PART I

Item 1.  Description of Business........................................... 3
Item 2.  Description of Property...........................................12
Item 3.  Legal Proceedings.................................................12
Item 4.  Submission of Matters to a Vote of Security Holders...............12

                            PART II

Item 5.  Market for Common Equity and Related Stockholder Matters..........13
Item 6.  Management's Discussion and Analysis or Plan of Operation.........14
Item 7.  Financial Statements..............................................16
Item 8.  Changes In and Disagreements With Accountants on
         Accounting and Financial Disclosure...............................16

                           PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons;
         Compliance with Section 16(a) of the Exchange Act.................17
Item 10. Executive Compensation............................................18
Item 11. Security Ownership of Certain Beneficial
         Owners and Management.............................................18
Item 12. Certain Relationships and Related Transactions....................18
Item 13. Exhibits and Report on Form 8-K...................................18
Signatures    .............................................................19

                                       2
<PAGE>


                           FORWARD LOOKING STATEMENTS

         This Report (including  without limitation the Risk Factors included as
Exhibit 99) contains  forward-looking  statements (within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934) regarding the Company and its business, financial condition, results of
operations and  prospects.  Words such as "expects,"  "anticipates,"  "intends,"
"plans,"  "believes," "seeks," "estimates" and similar expressions or variations
of such  words are  intended  to  identify  forward-looking  statements  in this
Report.   Additionally,   statements  concerning  future  matters  such  as  the
development  of new services,  technology  enhancements,  purchase of equipment,
credit  arrangements,  possible  changes  in  legislation  and other  statements
regarding matters that are not historical are forward-looking statements.

         Although  forward-looking  statements  in this Report  reflect the good
faith judgment of the Company's management, such statements can only be based on
facts and factors currently known by the Company. Consequently,  forward-looking
statements are inherently subject to risks and uncertainties, and actual results
and outcomes may differ  materially  from results and outcomes  discussed in the
forward-looking  statements.  Factors  that could  cause or  contribute  to such
differences in results and outcomes  include without  limitation those discussed
below as well as those discussed elsewhere in this Report.  Readers are urged to
carefully  review and  consider the various  disclosures  made by the Company in
this  Report,  which  attempts  to advise  interested  parties  of the risks and
factors that may affect the Company's business,  financial condition, results of
operations and prospects.


                                     PART I

     Sales On Line Direct Inc. (the  "Company") was  incorporated in Delaware as
Rose  International  Ltd. on August 9, 1995. As used in this Report,  unless the
context  otherwise  requires,  the term "Company"  refers to Sales OnLine Direct
Inc.,  a  Delaware  corporation.  The  Company's  main  website  is  located  at
www.collectingexchange.com,    which    features   the    following    websites:
www.auctioninc.com,   www.rotmanauction.com,   and   www.wwcd.com.   Information
contained  in the  Company's  websites  shall not be deemed to be a part of this
Report.  The  Company's  principal  executive  offices are located at 4 Brussels
Street,  Worcester,  Massachusetts  01610, and the Company's telephone number is
(508) 753-0945.

Item 1.  Description of Business.

                                    BUSINESS

History of the Company

         After its formation on August 9, 1995, the Company acted primarily as a
non-operating  holding company overseeing the operations of its subsidiaries and
joint ventures. The Company's two wholly-owned  subsidiaries included RCI, a New
Jersey  corporation,  organized  on December  2, 1987,  and SPS  Alfachem,  Inc.
("SPS"),  a New Jersey  corporation,  organized on May 22, 1995 and acquired May
14,  1996.  RCI was  primarily  engaged in the  manufacturing  and  marketing of
specialty  organic  chemical dyes used principally in the petroleum and plastics
industries.  On September 30, 1997, the Company transferred to the Chiralt Corp.

                                       3
<PAGE>

its  ownership of RCI and SPS in exchange for three million  (3,000,000)  common
shares  of  NexTech  Enterprises  International,  Inc.  (formerly  International
Imaging,  Inc.),  a Delaware  corporation  ("NexTech"),  which  resulted  in the
Company's owning less than 20% of NexTech.

         On  June 5,  1998,  the  Company  acquired  82.02%  of the  issued  and
outstanding  common  stock of The  Accord  Group,  Inc.  ("Accord"),  a Delaware
corporation,  located in Port Washington,  New York and on July 8, 1998, changed
its name to Securities Resolution Advisors,  Inc. ("SRAD").  Accord, through its
operating  subsidiary  Securities  Resolution  Advisors,  Inc. ("SRA"),  advised
investors who had lost money due to the advice, lack of fiduciary responsibility
or fraudulent  practices of brokers and broker dealers as to appropriate courses
of  action   with   respect to  arbitration  and  settlement  with  brokers  and
brokerage  firms.  The Company  issued  8,000,000  shares  common stock to three
individuals  in exchange for  8,000,000  shares  (82.02%) of the common stock of
Accord.  In December  1998,  as a part of a  restructuring,  SRA became a wholly
owned  subsidiary  of SRAD,  and the  Company  sold  Accord,  which had no other
assets, for $40,000.

     On February 24, 1999, the Company sold the SRA business to Richard  Singer,
the former  president  of the Company in exchange  for  8,000,000  shares of the
Company's common stock,  all of which were cancelled.  On February 25, 1999, the
Company purchased all of the outstanding common stock of Internet Auction, Inc.,
a Massachusetts  corporation ("Internet Auction"),  and subsequently changed its
name to Sales  Online  Direct,  Inc. The  acquisition  (the  "Transaction")  was
pursuant to an Agreement  and Plan of  Reorganization  (the  "Agreement")  dated
January 31, 1999 between the Company and Gregory Rotman,  Richard  Rotman,  Marc
Stengel and Hannah Kramer, the principal shareholders (the "IA Shareholders") of
Internet  Auction.  Pursuant to the Agreement,  the Company  acquired all of the
issued  and  outstanding  shares of the  capital  stock of  Internet  Auction in
exchange for the issuance to the IA  Shareholders  of an aggregate of 37,368,912
shares,  representing  approximately  80%, of the Company's  common stock.  As a
result of the Transaction,  Internet Auction became a wholly-owned subsidiary of
the Company,  the IA Shareholders own  approximately 80% of the Company's issued
and outstanding  common stock,  and the principal  business of Internet  Auction
became the business of the Company. Prior to the Transaction, Richard Singer was
a principal beneficial owner of the common stock of the Company.

     For  accounting   purposes,   the   Transaction  is  considered  a  capital
transaction  rather than a business  transaction.  This accounting  treatment is
identical to that resulting from a reverse acquisition,  except that no goodwill
or other intangible asset has been recorded.  The Company's financial statements
reflect the acquisition by Internet Auction of the net assets of the Company and
the  recapitalization  of Internet  Auction's common stock based on the exchange
rate in the Agreement.

         In  accordance  with  the  Agreement,  after  the  Transaction,  the IA
Shareholders  were  appointed  to the  Company's  Board  of  Directors,  and the
previously serving directors resigned from the Board.

                                       4
<PAGE>


         The following is a description of the Company's current business.

Overview

         Following  the  Transaction,   the  Company's  mission  was  to   offer
a branded  network of  comprehensive  shopping  services to buyers and seller of
collectibles. This was accomplished through its four main business divisions:

         Rotman  Auction--a  full service  auction house  specializing in sports
memorabilia and high end  collectibles.  Rotman Auction provides a full range of
services  to  sellers  and  buyers  including  live  online  bidding for premier
collectibles,  consignment  services,  authentication  of  merchandise,  digital
photography, and the purchase and sale of authentic memorabilia.

         Internet Auction,  Inc.--a person to person auction site that functions
similar  to eBay,  offering  sellers a vehicle  for  listing  items for sale and
buyers to bid on items of interest.

         World Wide Collectors Digest ("WWCD")--a premier e-commerce website for
dealers in the  collectibles  community.  WWCD is a  full-service  company  that
designs, hosts and maintains dealer websites.  WWCD's software allows clients to
create online storefronts, set prices, and sell directly to online shoppers.

         Internet  Collectibles--a  wholesale and retail  collectibles  division
that engages in the business of buying, warehousing, distributing, marketing and
selling collectibles. Internet Collectibles maintains a substantial inventory of
memorabilia  with popular and historical  significance  that allows customers to
directly  purchase the memorabilia  without the  competition  from bidders in an
auction format.

         The Company's  primary business is  collectibles.  Because of the large
growth in both the online auction and e-commerce industries, and the concomitant
increase  in mergers  and  strategic  alliances,  the  Company  has  focused its
resources and efforts to create a unique suite of Internet  applications for the
collectibles  industry that includes a  collectibles  portal,  a global  auction
search  and  a  research   center.   All   visitors   to  the  new   website  at
"www.collectingexchange.com"  will be able to use the  collectibles  portal  and
establish home pages tailored to their individual preferences and needs.

         The  Company's   new  refocused   mission  is  to  become  the  premier
collectibles  portal site for the  collectibles  industry by adding value to the
collectible  process. The Company will strive to become the premier educator and
global source of information for the  collectibles  community.  The site's tools
will provide  information  to collectors  to help them make  informed  decisions
about price, authenticity and trading sites to buy or sell. The site is intended
to provide users with a comprehensive,  one-stop shopping collectible experience
through a collectibles marketplace,  linking top collectible sites to buyers and
sellers from around the world.


                                       5

<PAGE>

         When fully operational,  the site will contain components  developed by
the Company as well as  components  licensed  from others or  developed  for the
Company.  The site is planned to be a general  information  search  engine  like
"Yahoo" that is specific to collectible  web sites.  The portal has several main
functions.  First, it searches and collects  information from every  collectible
site on the Internet.  Through a technique known as "spidering," the Web will be
searched 24 hours a day, to retrieve collectibles information.  This information
is then stored in the site's  database  where users can  retrieve it  instantly.
Second,  the portal  provides  information  on a variety of  collectible  topics
including price guides, show calendars,  auction listings,  library information,
grading  and  authentication,   publications  restoration  services,  collecting
software, dealers, classifieds, etc. Third, it serves as a gatekeeper by linking
collectors  immediately to selected websites.  Finally,  when fully operational,
the portal will enable users to  customize  their home pages with both real time
auction  prices of  specific  collectible  items and more  traditional  Internet
services (stock quotes, news, weather, etc.) and view these while pursuing their
collectible  interests on the site's  search  engine.  The portal was  initially
launched on January 27, 2000.

         In  addition,  when more fully  operational,  the site is  expected  to
integrate with a global auction search and bidding platform--a one-stop, feature
rich resource for online auctions. The advanced cross-auction search engine will
provide a  comprehensive,  categorized and searchable index of all auction sites
for a specific  item,  eliminating  the need to search  multiple  auction sites.
Additionally,  bidders can be notified about the listing of new items, have them
monitored and  participate on multiple  auction sites  simultaneously.  Sellers,
too,  will  benefit  from this search  engine as they will be able to list items
across multiple sites  simultaneously.  Sellers also benefit from the ability to
quickly and easily list items across multiple  sites.  They will also be able to
better manage the selling  process,  working in conjunction with leading auction
sites, through use of the following features:

         Scheduled postings--sellers can schedule the specific day and time they
want their items listed, freeing them from constant computer monitoring

         Auction  tracking--sellers  can  track all of their  auctions  from one
centralized  location.  They can also view current  auctions,  pending auctions,
closed auctions and even track offline activities.

         Track  post  auction  activity--sellers  can track  emails,  receipt of
payment, shipping status and receive feedback

         Customized   templates--sellers  can  create  effective,   eye-catching
listings with automated, customized templates

         Cross Auction Postings--sellers only need to list their sale items once
before posting on multiple auction sites

         Inventory  Management--software to automatically  recalculate the value
of available  inventory,  track  existing  inventory and inform  sellers when to
restock

         Quick  Start--online  sellers can immediately  import existing auctions
into collectingexchange.com's interface

         One-Click Re-list--sellers can re-enter unsold items with one keystroke

                                       6

<PAGE>


         The site is also expected to provide  research  information  for users.
The research feature will be a real-time,  industry-wide  repository of accurate
information that can be used to research specific  collectible items. The search
engine will store information on each and every collectible item, enabling users
to have access to  historical  pricing  information  based on  realized  prices,
actual views of the collectible articles,  experts on authentication,  appraisal
and grading services, feedback opportunities and community discussions.

         As    a    search    engine    for    the    collectibles     industry,
collectingexchange.com is intended to provide its visitors with information with
which  to  make  educated  decisions   regarding   collectibles.   The  advanced
architectural  technology of the search engine will allow for the  collection of
information about  collectible  items.  Because  fraudulently sold items are the
largest concern facing the industry and its consumers,  the Company will provide
visitors  with the  research  tools to complete  transactions  based on the most
accurate, verified material available. Buyers and sellers will also benefit from
direct  linkage to auctions,  storefronts,  and  classifieds,  thus reducing the
buyer's search time for desired items while  accelerating the sale cycle for the
seller.

         The Company believes that as a "collectibles  community," the site will
not only meet the  collectibles  needs of its visitors  but their other  service
needs as well. The web site's user friendly approach will personalize the Web by
providing visitors with a wide range of the more typical search engine services,
e.g., news, email, stock quotes, travel, etc.

         In March,  2000,  the  Company  acquired  Internet  Collectible  Awards
(www.collectiblenet.com),  an internet business that polls consumers and reports
on the best Internet collectibles Web sites in a variety of categories.

Industry Background

Growth of the Internet and the Web
----------------------------------

         Consumers  are  spending  an  increasing  amount  of time  on the  Web.
International Data Corporation,  a company that reports on Internet traffic, has
estimated  that at the end of 1998 there  were over 51 million  Web users in the
United  States and that by the end of 2002 the number of Web users in the United
States will increase to over 135 million.  The growth in the number of Web users
and the  amount  of time  spent on the Web is  being  driven  by the  increasing
importance of the Internet as a communications  medium, an information resource,
and a sales and  distribution  channel.  The  Internet  has also  evolved into a
unique marketing channel.  Some examples of business transactions which occur on
the Internet include trading securities, buying consumer goods, paying bills and
purchasing airline tickets. Unlike the traditional marketing channels,  Internet
retailers do not have many of the overhead costs borne by traditional retailers.
The Internet offers the opportunity to create a large,  geographically dispersed
customer base more quickly than traditional retailers.  The Internet also offers
customers  a  broader  selection  of goods to  purchase,  provides  sellers  the
opportunity to sell their goods more efficiently to a broader base of buyers and
allows business transactions to occur at all hours.


                                       7

<PAGE>


Growth of the Collectibles and Online Auction Industries
--------------------------------------------------------

         The Company serves both the collectibles and online auction industries.
Collectibles  Industry Report,  1999 reported that total consumer sales
rose 6%, to reach $10.7 billion,  in 1998.  The Internet  captured $280 million
dollars in collectible  sales. As an industry,  collectibles  are enjoying a 10%
compounded  annual  growth  rate for the  fifth  continuous  year.  There are 37
million  collectors in America  today,  10 million of whom use the Internet as a
source  to  buy,  sell  and  trade  collectibles.  (NewsEdge  Corporation).  The
industry,  according to Collectibles  Industry Report, 1999, has seen a shift in
demographics as baby-boomers have begun to take up the collecting  pastime.  The
new market has more male collectors,  higher household incomes,  children in the
home, and a willingness to use a range of distribution  channels,  including the
Internet.  The new  demographics  have  also  created a shift in  interest  from
traditional  collectibles,  e.g.  figurines and dolls, to products that meet the
demands of this generation of collectors.

         The online auction industry is a large and rapidly growing industry and
is expected to become a permanent player in e-commerce.  Online auctions resolve
the weaknesses of traditional  auctions (i.e. limited  geographical  coverage, a
dearth of product variety, high transaction costs and information inefficiency),
as it is capable of handling large quantities of data and supporting an infinite
number of products and services. It also allows buyers and sellers to trade on a
global  basis.  Online  auctions  also drive user  retention  and build  brands.
Auctions  fit the  definition  of a sticky  application--something  that engages
users and keeps them coming back.

         According to Forrester Research,  a consulting firm that reports on the
online auction industry, online auction sales are estimated to reach $19 billion
by 2003. According to the Online Reporter (11/1/99),  eBay is the largest of the
online auctions,  with a user base of 7.7 million people,  up from 1.3 million a
year ago.  Two-thirds of these users are repeat customers.  It is also estimated
that users, in general,  spend an average of 130 minutes per month on this site,
making it one of the most visited  sites on the entire  Internet.  The number of
auction sites and the recent  industry  mergers  suggest that the online auction
industry is not a passing fad.

Business Strategy

         Because of the enormous  growth in the online auction  industry and its
concomitant increase in merger and acquisition activity,  the Company decided to
consolidate its entities in order to focus on the collectors'  "stock exchange."
The integrated  collectibles  portal,  global auction search and research center
have become the Company's core businesses.

         The Company has adopted an incremental growth strategy and has in place
agreements with the companies to complete the three milestones in year 2000:

         o The launch of the collectibles portal

         o The launch of the global auction search

         o The launch of the research center



                                       8

<PAGE>

         This  approach  provides the Company with the  ability to begin growing
its business through the portal while providing  sufficient time for development
and testing of the research center. During this research and development period,
the Company will begin implementing an innovative  marketing and sales campaign.
This campaign will focus on building the Company's  advertising and sponsor base
as well as implementing a more traditional media buying strategy.

          The Company  believes that  "stickiness"  is one of the most important
trends in today's  Internet.  Stickiness  refers to finding  ways of keeping web
users "glued" to a particular web site. The key to stickiness is providing users
with so much useful  content that they can find virtually  everything  they need
onsite  without  having to go to another  site.  The  collectibles  portal  will
provide the "stickiness factor" for www.collectingexchange.com. Individuals will
have the  opportunity  to create  personalized  home pages,  providing them with
access to their  daily  Internet  services  while  pursuing  their  collectibles
interests  on a  search  engine  designed  to  provide  general  information  by
category.  Together, the three site components will provide site visitors with a
comprehensive, one-stop shopping collectible experience.

         On February  1, 2000,  the Company  launched a financial  website  that
offers its visitors  real-time  financial and business news and a  comprehensive
source for stock  quotes,  charts,  news,  financial  analysis,  portfolios  and
investment  research. The Company plans to add message boards and online trading
to   the    site   in   the    future.    The   new   site   is    located    at
"www.collectingexchange.com/finance".

Marketing and Sales

         The success of  collectingexchange.com is incumbent upon the visibility
it will receive on the Internet and the associated  revenues  generated by sales
of product,  advertising and services. Branding the Company's corporate identity
and its services is a key to its success.

         The  marketing  plan is designed to position the Company as the premier
collectibles  site on the Internet.  Its unique  feature will be its value as an
information provider to buyers and sellers in the collectible  marketplace.  The
Company will target both the  traditional  collector  and the new  generation of
collectors (as previously described in "Industry Background").  The Company will
also  target  dealers,  licensors,  licensees,  distributors  and others to host
collectible pavilions and other e-commerce sites and storefronts.

         Marketing  Internet  companies is a relatively new phenomenon.  Whereas
earlier Internet advertising was mostly accomplished through banner advertising,
the  industry  is now  marketing  web  sites  through  a  combination  of online
advertising  and more  traditional  media and  direct  mail  advertisement.  The
Company is adopting this approach in its marketing campaign.



                                       9

<PAGE>


Revenue Sources

         Following the  Transaction on February 25, 1999, the Company  primarily
generated revenue from sales of the Company's  purchased inventory and from fees
and commissions on sales of merchandise  under  consignment  type  arrangements.
However,  it is  anticipated  that  future  sources of revenue  generation  will
include advertising revenue and service revenue,  particularly  through the sale
of pavilion spots and referral  links.  Pavilion spots are company  sponsorships
that  the  Company  will  sell.  These  sponsorships  give  companies  exclusive
storefront rights for their collectible  category.  For example, if Sony were to
purchase  a  pavilion,  it would  host the only  site on  collectingexchange.com
dealing with music and music videos.  In the Sony  pavilion,  visitors  would be
able to research the history of these  items,  the  historical  pricing of these
collectibles,  read articles and speak with experts on authentication.  Visitors
would also be provided with referral  links to Sony and other sites for purchase
of merchandise.

         It is  anticipated  that  referral  links  may also  become a source of
advertising income for the Company.  Sellers of merchandise will pay the Company
for listing their  storefronts  on  collectingexchange.com.  When a site visitor
requests a search for a collectible  item,  the Company will provide the visitor
with a direct link to the seller's  site,  thus driving the sale.  This referral
link is the manner in which the seller can obtain visibility for its collectible
item.

         In addition to pavilions and referral links,  advertising  revenues may
also come from targeted banner advertising and general banner advertising.

          In terms of  services,  the  Company  anticipates  users  will pay for
appraisal and grading services.  Other services  generating revenue will include
training  seminars,   online  autograph  signings,   fulfillment   services  for
merchants, and the selling of historical price trend reports.

Competition

         The electronic  commerce market is new,  rapidly evolving and intensely
competitive,  and the Company  expects  competition  to intensify in the future.
Barriers to entry are relatively low, and current and new competitors can launch
new sites at a relatively low cost using commercially available software.  Under
it's  former  structure,  the  Company  was  competing  with a variety  of other
companies  depending  on the type of  merchandise  and sales  format  offered to
customers.  These competitors  include: (i) various Internet auction houses such
as Egghead, uBID, Yahoo! Auctions,  First Auction,  Surplus Auction,  WebAuction
and Insight  Auction;  (ii) a number of indirect  competitors that specialize in
electronic  commerce  or derive a  substantial  portion  of their  revenue  from
electronic commerce,  including Internet Shopping Network, AOL, Shopping Com and
Cendant Corp.;  and (iii) a variety of other  companies  that offer  merchandise
similar to that of the Company but through physical auctions.

                                       10

<PAGE>

         Because the Company's new collectibles  portal structure is not a buyer
or  seller  of  collectibles,  it is not in  direct  competition  with  existing
collectible or online auction sites. The portal will not compete with either the
giants  or  the  small  players  in  the  collectibles  auction  and  e-commerce
industries. Rather, the Company will work in collaboration with these companies.
Further,  because  the  research  capacity  of the new  website  will be able to
validate  the  authenticity  of  collectible  items,  other sites will value its
services.  Because  collectingexchange.com  is the provider of information,  not
sales,  it stands  alone at the present  time.  However,  the  Company's  Rotman
Auction operations will still continue to face the competition discussed above.

         Many  collectible  and  online  auction  sites are  beginning  to use a
portal,  or  community,  as a means of retaining its users.  What  distinguishes
collectingexchange.com  from these other sites will be its research center.  The
industry  currently  lacks an  independent  repository of expert and  verifiable
collectible information to enable collectors to make educated purchases.

         Although no other site currently has the technology to store the extent
of collectible  information  as the Company,  the Company runs the risk of other
sites  entering into this sector and there can be no assurance  that the Company
can maintain its competitive position against potential competitors,  especially
those with greater financial,  marketing,  customer support, technical and other
resources than the Company. Increased competition is likely to result in reduced
operating  margins,  loss of market share and a diminished brand franchise,  any
one of which could materially  adversely affect the Company's business,  results
of operations and financial condition.

Intellectual Property

         The  Company's  software  programs  are  proprietary.  To  protect  its
interest in its intellectual property, the Company has non-disclosure agreements
with its employees and restricts access by others to its proprietary software.

         The Company believes that its products and other proprietary  rights do
not infringe on the proprietary rights of third parties. However, the Company is
a recent entrant in the sale of merchandise on the Internet, and there can be no
assurance  that third parties will not assert  infringement  claims  against the
Company in the future  with  respect  to  current  or future  products  or other
Company  works.  Such an assertion may require the Company to enter into royalty
arrangements or result in costly litigation.

         The Company is also dependent upon existing  technology  related to its
operations. To the extent that new technological developments are unavailable to
the Company on terms  acceptable to it, or not at all, the Company may be unable
to continue to implement its business  plan which would have a material  adverse
effect on the Company's business, prospects,  financial condition and results of
operations.

                                       11

<PAGE>

Research and Development

         Over the past 12 months the  Company  invested  approximately  $300,000
into  Collecting  Exchange  web site for  design,  graphics,  labor and  various
software  components.  The Company  licensed an e-commerce   software system for
$50,000 that will allow the Company's  merchant  customers to create and manager
their own  storefront on the web. An additional  $10,000 was paid for the source
code.  The Company  spent  $200,000  to design and  install a high  scalability,
reliable  and  secure  network/communications   infrastructure  to  sustain  the
Company's anticipated web traffic going forward. Other labor and consulting fees
amounted to $250,000 for system security and integrity.

Employees

         The  Company  currently  employs  28  people,  including  20 full  time
employees.  The Company  believes that its future success will depend in part on
its continued ability to attract, hire and retain qualified personnel.

Government Regulation

         The Company is not currently subject to direct federal,  state or local
regulation,  and laws or  regulations  applicable  to access or  commerce on the
Internet,  other than regulations  applicable to businesses generally.  However,
due to the  increasing  popularity  and use of the  Internet  and  other  online
services,  it is possible that a number of laws and  regulations  may be adopted
with respect to the Internet or other online  services  covering  issues such as
user privacy,  freedom of expression,  pricing,  content and quality of products
and  services,   taxation,   advertising,   intellectual   property  rights  and
information security.

Item 2.           Description of Property.

         The  Company's  corporate  headquarters  are  presently  located  at  4
Brussels  Street,  Worcester,  Massachusetts  01610. In July,  1999, the Company
opened a second  office  located  at 100  Painters  Mill Road in  Owings  Mills,
Maryland  21117.  The Company leases the Maryland  office,  which is the primary
location of the host  computers and Internet  access lines.  The lease is a five
year  lease  with a monthly  rent of  $7,494.67.  The  Company  pays rent on the
Brussels Street, Worcester location and another office in Canton,  Massachusetts
in the amount of approximately $2,500 per month on a tenant-at-will basis.


Item 3.           Legal Proceedings.

         The Company is not a party to any material pending legal proceedings.


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

         None.

                                       12

<PAGE>


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

         (a) Market  Information - The  Company's  common stock began trading on
August 11, 1995 and is presently  traded on the NASDAQ  Bulletin Board under the
symbol,  "PAID".  The following table sets forth the high and low bid prices for
the Company's Common Stock for the eight quarters ended December 31, 1999.

         1999                                         High              Low
                                                      ----              ---
         Quarter ended March 31, 1999                2 1/2               1/4
         Quarter ended June 30, 1999                 8 3/16            1 1/4
         Quarter ended September 30, 1999            3 1/32            1 3/16
         Quarter ended December 31, 1999             1 3/8              13/32


         1998                                          High              Low
                                                       ----              ---
         Quarter ended March 31, 1998                  3/8               5/32
         Quarter ended June 30, 1998                   3/8               1/8
         Quarter ended September 30, 1998            1 3/16              3/8
         Quarter ended December 31, 1998               7/8               1/4


         (b) Holders - As of  December 31, 1999, there  were approximately 146
 holders of record of the Company's Common Stock.

         (c) Dividends - The Company has not  previously  paid cash dividends on
its  common  stock,  and  intends  to utilize  current  resources  to expand the
business;  thus, it is not  anticipated  that cash dividends will be paid on the
Company's Common Stock in the foreseeable future.

                                       13

<PAGE>


Item 6.           Management's  Discussion  and  Analysis or Plan of Operations.

Overview

         As of  December  31,  1998,  the sole  business  of the Company was the
business of SRA, its sole, wholly-owned subsidiary,  which served members of the
investing  community who had lost money due to fraudulent  practices of brokers.
In December  1998,  the  management of the Company  decided to  discontinue  the
operations  of that  business.  In February  1999,  the Company  sold SRA to the
management of SRA, in exchange for eight million shares of the Company's  Common
Stock, with the goal of entering into the Internet  business.  In furtherance of
that goal, on February 25, 1999,  the Company  purchased all of the  outstanding
stock of Internet  Auction in exchange for  37,368,912  shares of the  Company's
Common Stock.  At the time the  transaction  was agreed upon by the then current
management  of  the  Company,   the  average  price  of  the  Common  Stock  was
approximately $.28 per share. As a result of this transaction,  Internet Auction
became a wholly-owned  subsidiary of the Company,  and the principal business of
the Company is now the business of Internet Auction, Inc.

         Prior to the  transaction  with the  Company,  the  business  currently
conducted by the Company was conducted through four related companies:  Internet
Auction,  Inc., Rotman Auction,  Internet Collectibles and World Wide Collectors
Digest,  Inc. Prior to, and in anticipation of the transaction with the Company,
the companies were combined and their operations were  integrated.  As a part of
this  integration,   a  substantial   inventory  of  Internet  Collectibles  was
transferred into Internet Auction.

         For  accounting  purposes,  the  transaction  is  considered  a capital
transaction  rather than a business  transaction.  This accounting  treatment is
identical to that resulting from a reverse acquisition,  except that no goodwill
or other intangible asset has been recorded.  The Company's financial statements
reflect the acquisition by Internet Auction of the net assets of the Company and
the  recapitalization  of Internet  Auction's common stock based on the exchange
rate in the merger agreement.

         The  following  is a  discussion  of  the  results  of  operations  and
financial  conditon of the Company for the year ended,  and as of,  December 31,
1999.  These  operations in the  preceding  fiscal year were  conducted  largely
through Internet Auction, Inc. as a private company.  Consequently, a comparison
to the results of operations and financial condition of the Company for the year
ended, and as of, December 31, 1998 is not particularly meaningful.

Operations

         For the year ended  December  31,  1999 the Company  experienced  rapid
growth in its online traffic. To support this new level of activity, the Company
made significant investment in personnel,  infrastructure and marketing programs
during the year.

         For the year ended  December 31,  1999,  gross  merchandise  sales were
approximately  $1,643,000 including consignment sales of approximately $790,000.
Net revenues (sales of  Company-owned  inventory plus commissions on consignment
items) were $1,003,200,  most of which is attributable to sales of the Company's
own  inventory.  Consignment  sales for the year ended  Decmeber  31,  1999 were
approximately $790,000, or 48% of gross merchandise sales. In the 3rd quarter of
1999 the Company switched from an 80% consignment model to 20% consignment sales
and now sells 80% Company-owned product.

         Costs of revenues  increased to $706,488 in the year ended December 31,
1999.  This  increase is due to the fact that most of the revenues for 1999 were
derived from sales of the Company's  own inventory  rather than fee based income
from consignment sales.


                                       14

<PAGE>

       Sales,  general and  administrative  ("SG&A") expenses for the year ended
December 31, 1999 were $2,459,743  (compared to $10,357 for 1998). This increase
in SG&A expenses  include higher  personnel and related costs,  consulting  fees
attributable to the Company's engineering and product development.

         As a result of the significant  SG&A expenses and the relatively  brief
period of combined operations,  the Company experienced a net loss of $2,183,040
for the year ended December 31, 1999 or ($.05) per share.

         The Company  believes that  inflation has not had a material  effect of
its results of operations.


Working Capital and Liquidity

         Cash and cash  equivalents  were  $221,213 at December 31, 1999.

         In  April  1999  the  Company  assigned  certain  options  it held  for
approximately  $2,450,000; it is not anticipated that this will be a significant
or recurring source of capital in the future.

         On March 23,  2000,  the Company  entered  into a  Securities  Purchase
Agreement (the "Agreement"),  whereby the Company sold an 8% convertible note in
the amount of  $3,000,000,  due March 31,  2002 to  Augustine  Fund,  L.P.  (the
"Buyer").  The note is convertible into common stock at a conversion price equal
to the  lesser  of:  (1) one  hundred  ten  percent  (110%) of the lowest of the
closing bid price for the common  stock for the five (5)  trading  days prior to
March 23, 2000, or (2) seventy-five  percent (75%) of the average of the closing
bid  price  for the  common  stock  for the five (5)  trading  days  immediately
preceding the  conversion  date.  Had the Buyer  converted the note on March 23,
2000,  the Buyer  would  have  received  $4,000,000  in  aggregate  value of the
company's common stock upon the conversion of the $3,000,000  convertible  note.
As a  result,  the  intrinsic  value of the  beneficial  conversion  feature  of
$1,000,000  will be allocated to debt discount and additional  paid-in  capital.
Since the debt is  convertible  at date of issuance,  the debt  discount will be
charged to earnings at that time.

         In connection  with the Agreement,  the Company also issued warrants to
the Buyer and Delano Group  Securities to purchase 300,000 and 100,000 shares of
common  stock,  respectively.  The  purchase  price per share of common stock is
equal to one hundred and twenty  percent (120%) of the lowest of the closing bid
prices  for the  common  stock  during  the five (5)  trading  days prior to the
closing date. The warrants expire on March 31, 2005.


                                       15

<PAGE>


         In addition,  the Company entered into a Registration Rights Agreement,
whereby the Company agreed to file a Registration  Statement with the Securities
and Exchange Commission (SEC), within 180 days of the closing date, covering the
common stock to be issued upon the conversion of the convertible  note and stock
purchase  warrants.

         If the Registration  Statement is not declared  effective by the SEC on
or before  September 30, 2000,  then with respect to any portion of the note not
previously  converted into common stock,  the applicable  conversion  percentage
will decrease by two percent (2%) each thirty day period until the  Registration
Statement  is declared  effective  by the SEC. If the SEC has not  declared  the
Registration  Statement  effective  within one year after  March 23,  2000,  the
applicable conversion percentage shall be fifty percent (50%).

         Also, if the Registration Statement is not filed by the filing date and
not declared effective by the SEC on or prior to September 30, 2000, the Company
shall pay cash, as liquidating  damages,  for such failure. The required payment
will be equal to two (2%) of the purchase price of the note and warrant for each
thirty-day  period,  until the breach of the  Registration  Rights  Agreement is
cured.

         Management  believes that the proceeds from this  Convertible  Note and
cash from operations will provide sufficient  liquidity and capital resources to
finance the Company's operations through the end of the current fiscal year.

Item 7.           Financial Statements.

       The financial  statements  and  supplementary  data required by this item
appear on Page F-1 immediately following the signature page.

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

       As disclosed in the  Company's  8-K filed on April 29, 1999,  on February
15, 1999, the Company's  former Board of Directors  approved the  appointment of
Stephen  P.  Higgins,  C.P.A.  as the  Company's  independent  certified  public
accountants to provide  accounting and auditing services for the Company for the
year ended  December 31, 1998 and also approved  termiantion  of the services of
Guest & Company as the  Company's  independent  auditors.  On March 29, 2000 the
Company  filed a Form 8-K  disclosing  that  the  Company's  Board of  Directors
approved  the  termination  of the accouanting  services  provided by Stephen P.
Higgins  C.P.A.  on March 28, 2000 and also  previously  approved,  on March 24,
2000,  the  appointment  of Wolf & Company,  P.C. as the  Company's  independent
certified  accountants to provide  accounting and auditing services for the year
ended December 31, 1999.


                                       16

<PAGE>


                                    PART III

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

       The  information  required by Item 9 regarding  the  Company's  executive
officers is set forth below.  The information  required by Item 9 concerning the
directors  of the  Company  is  incorporated  by  reference  from the  Company's
definitive  information  statement for its 2000 Annual  Meeting of  Shareholders
under the caption "Election of Directors." The Company's proxy statement will be
filed  pursuant  to Rule 14a within 120 days after the close of the fiscal  year
for which this report is filed.

       The  information  required by Item 9 relating to compliance  with Section
16(a) of the Exchange Act is incorporated herein by reference from the Company's
definitive  information  statement for its 2000 Annual  Meeting of  Shareholders
under the caption  "Compliance  with  Section  16(a)of the  Exchange  Act".  The
Company's  proxy  statement  will be filed  pursuant to Rule 14a within 120 days
after the close of the fiscal year for which this report is filed.

       The  following  table  sets  forth  certain  information   regarding  the
executive officers of the Company.

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

       Gregory Rotman*     34               President and CEO          1999
       Richard Rotman*     29               Vice President,            1999
                                            Chief Financial Officer
                                             and Secretary
       Marc Stengel        42               Executive Vice President   1999

----------------------
* Gregory Rotman and Richard Rotman are brothers.

     The  following  is a  description  of the current  occupation  and business
experience for the last five years for each executive officer.

     Gregory P. Rotman has served as a Director and the President and CEO of the
Company since its acquisition of Internet Auction. Prior to joining the Company,
he was  involved in  starting a group known as  Teamworks  Inc.,  LLC.  Its sole
purpose from 1991-1995 was to facilitate the design,  financing and build-out of
The MCI National  Sports Museum in Washington D.C. Today the MCI National Sports
Museum is the only  interactive,  all encompassing,  sports-based  museum in the
United States.

     Richard S. Rotman has served as a Director  and the Vice  President,  Chief
Financial Officer and Secretary of the Company since its acquisition of Internet
Auction.  Prior to joining the Company,  he was involved in the  management  and
day-to-day operations of Rotman Auction,  which he formed in February 1997. From
1995 until  February  1997,  Mr. Rotman worked for the family  business,  Rotman
Collectibles,  where  he  began in sales  and  distribution  in the new  product
division.  As the industry was changing,  Rotman  Collectibles began focusing on
auctions as a more  permanent  division  and during  1996,  he began to create a
presence on the Internet.  Mr. Rotman's  primary  expertise is in management and
daily operations. From 1994 to 1995, Mr. Rotman served as the director of an art
gallery in Jackson, Wyoming, selling original artwork to high-end clientele.


                                       17

<PAGE>


     Marc Stengel has served as a Director and Executive  Vice  President of the
Company since its acquisition of Internet Auction.  He runs the daily operations
of the websites for the Company, including systems administration and overseeing
the  programming  for each of the  Company's  divisions.  Prior to  joining  the
Company, he served as president of Worldwide  Collectors Digest,  Inc., which he
co-founded in 1994 in an effort to combine his knowledge of computer  technology
with his interest in sports.  Prior to that, Mr. Stengel ran his family clothing
business.

Item 10.       Executive Compensation.

     The information  required by Item 10 is incorporated herein by reference to
the section labeled "Executive  Compensation"  which appears in the Registrant's
definitive  information  statement for its 2000 Annual Meeting of  Shareholders.
The Company's proxy statement will be filed pursuant to Rule 14a within 120 days
after the close of the fiscal year for which this report is filed.

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

     The information  required by Item 11 is incorporated herein by reference to
the section labeled "Principal Shareholders and Management  Shareholdings" which
appears in the Registrant's definitive information statement for its 2000 Annual
Meeting of Shareholders. The Company's proxy statement will be filed pursuant to
Rule 14a  within  120 days  after the close of the  fiscal  year for which  this
report is filed.

Item 12.       Certain Relationships and Related Transactions.

     The  information  required by Item 12 is  incorporated  by reference to the
section  labeled  "Certain  Transactions"  which  appears  in  the  Registrant's
definitive  information  statement for its 2000 Annual Meeting of  Shareholders.
The Company's  information  statement  will be filed pursuant to Rule 14a within
120 days after the close of the fiscal year for which this report is filed.

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

               (a)   Exhibits.

     Exhibits are numbered in accordance  with Item 601 of  Regulation  S-B. See
"Exhibit  Index"  immediately  following the  financial  statements of this Form
10-KSB, beginning on page E-1.

               (b)   Reports on Form 8-K.

                     None


                                       18

<PAGE>

                                   SIGNATURES


         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934,  the  registrant  has duly caused this annual report to be
signed on its behalf by the undersigned hereunto duly authorized.


                            SALES ONLINE DIRECT INC.




Date:  April 14, 2000                By: /s/ Gregory Rotman
                                         ---------------------------------------
                                         Gregory Rotman, President and CEO


         In accordance with the Exchange Act, this annual report has been signed
below by the following persons on behalf of the registrant and in the capacities
and on the dates indicated:



Date: April 14, 2000                 /s/  Gregory Rotman
                                     -------------------------------------------
                                     Gregory Rotman, President, CEO and Director



Date: April 14, 2000                 /s/   Richard Rotman
                                     -------------------------------------------
                                     Richard Rotman, Vice President, Chief
                                     Financial Officer, Secretary and Director



Date: April 14, 2000                 /s/   Marc Stengel
                                     -------------------------------------------
                                     Marc Stengel, Executive Vice President and
                                     Director



Date: April 14, 2000                 /s/   Hannah Kramer
                                     -------------------------------------------
                                     Hannah Kramer, Director


                                       19

<PAGE>
                            Financial Statements and
                             Report of Independent
                          Certified Public Accountants

                           Sales Online Direct, Inc.
                           December 31, 1999 and 1998





                                      F-1
<PAGE>



                           TABLE OF CONTENTS

Sales Online Direct, Inc.                                             Page

Independent Auditors' Report                                          F-3

Balance Sheet                                                         F-4

Statements of Operations                                              F-5

Statements of Changes in Stockholders' Equity                         F-6

Statements of Cash Flows                                              F-7 - F-8

Notes to Financial Statements                                         F-9 - F-19





                                      F-2
<PAGE>


                          INDEPENDENT AUDITORS' REPORT



The Board of Directors
Sales OnLine Direct, Inc.
Worcester, Massachusetts


We have audited the accompanying  balance sheet of Sales OnLine Direct,  Inc. as
of December 31,  1999,  and the related  statements  of  operations,  changes in
stockholders' equity and cash flows for each of the years in the two-year period
then ended.  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.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of Sales OnLine Direct, Inc. as of
December 31, 1999, and the results of its operations and its cash flows for each
of the years in the  two-year  period then ended in  conformity  with  generally
accepted accounting principles.



/s/Wolf & Company, P.C.



Boston, Massachusetts
April 12, 2000

                                      F-3

<PAGE>



                            SALES ONLINE DIRECT, INC.

                                  BALANCE SHEET

                                December 31, 1999


                                     ASSETS


Current assets:

    Cash and cash equivalents                                $    221,213
    Accounts receivable                                            48,682
    Inventory                                                     629,729
    Prepaid expenses                                               72,992
    Other current assets                                           11,236
                                                                   ------

              Total current assets                                983,852
                                                                   -------

Property and equipment, net                                       613,365
Goodwill, net                                                      49,765
Other assets                                                       18,667
                                                                ---------

              Total assets                                   $  1,665,649
                                                             ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
    Accounts payable                                         $    348,504
    Accrued expenses                                               81,483
                                                              -----------

               Total current liabilities                          429,987
                                                              -----------

Commitments and Contingencies

Stockholders' equity:
    Common stock, $.001 par value, 100,000,000 shares
     authorized; 46,711,140 shares issued and outstanding          46,711
    Additional paid-in capital                                  4,010,033
    Accumulated deficit                                        (2,207,171)
    Unearned compensation                                        (613,911)
                                                                 --------

               Total stockholders' equity                       1,235,662
                                                                ---------

               Total liabilities and stockholders' equity     $ 1,665,649
                                                              ===========


See accompanying notes to financial statements.

                                       F-4

<PAGE>


                            SALES ONLINE DIRECT, INC.

                            STATEMENTS OF OPERATIONS

                     Years Ended December 31, 1999 and 1998






                                                1999                 1998
                                                ----                 ----

Revenues                                   $  1,003,200          $    24,755

Cost of revenues                                706,488                    -
                                                -------             --------
Gross profit                                    296,712               24,755

Selling general and
    administrative expenses                   2,459,743               10,357
                                            -----------            ---------

Income (loss) from operations                (2,163,031)              14,398

Other income                                     92,701                    -

Loss on sale of securities                     (112,710)                   -
                                             ----------            ---------

Income( loss) before income taxes            (2,183,040)              14,398

Provision for taxes on income                         -               (2,160)
                                             ----------            ---------
Net income (loss)                          $ (2,183,040)         $    12,238
                                            ===========            =========

Earnings (loss) per share:
    Basic                                  $      (0.05)         $         -
                                            ===========            =========

    Weighted average shares                  45,277,812           37,368,912
                                            ===========           ==========


See accompanying notes to financial statements.

                                      F-5
<PAGE>


<TABLE>
<CAPTION>

                            SALES ONLINE DIRECT, INC.

                  STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

                     Years Ended December 31, 1999 and 1998

                                                     Common Stock
                                                ---------------------
                                                                         Additional                Stock
                                                                          Paid-in   Accumulated Subscriptions   Unearned
                                                  Shares       Amount     Capital     Deficit   Receivable    Compensation    Total
                                                  ------       ------     -------     -------   ----------    ------------    -----

<S>                                             <C>           <C>         <C>       <C>         <C>          <C>           <C>
Balance, December 31, 1997                      37,368,912    $ 37,369    $   -     $(36,369)   $        -   $          -  $  1,000

Stock subscriptions receivable                           -           -        -            -        (1,000)             -    (1,000)

Net income                                               -           -        -       12,238             -              -    12,238
                                                ----------    --------    --------   -------     ---------    -----------   -------

Balance, December 31, 1998                      37,368,912      37,369        -      (24,131)       (1,000)             -    12,238

Collection of stock subscriptions
    receivable                                           -           -        -            -         1,000              -     1,000

Contribution of assets of
    World Wide Collectors Digest                         -           -     33,229          -             -              -    33,229

Contribution of collectibles
    Inventories                                          -           -    769,764          -             -              -   769,764

Acquisition of Securities Resolution
    Advisors, Inc.                               9,342,228       9,342     (8,854)         -             -              -       488

Proceeds from assignment of options                      -           -  2,450,000          -             -              - 2,450,000

Compensatory stock options granted                       -           -    757,848          -             -       (757,848)        -

Amortization of stock-based compensation                 -           -          -          -             -        143,937   143,937

Issuance of stock options to consultant
    for services                                         -           -      8,046          -             -              -     8,046

Net loss                                                 -           -          - (2,183,040)            -              -(2,183,040)
                                                ----------     ------- ---------- ----------       -------   ------------  --------
Balance, December 31, 1999                      46,711,140     $46,711 $4,010,033$(2,207,171)      $     -   $   (613,911)$1,235,662
                                                ==========      ======  ========= ==========       =======   ============ ==========
</TABLE>


See accompanying note to financial statements.

                                       F-6
<PAGE>

<TABLE>
<CAPTION>

                            SALES ONLINE DIRECT, INC.

                            STATEMENTS OF CASH FLOWS

                     Years Ended December 31, 1999 and 1998


                                                                                          1999               1998
                                                                                          ----               ----
Operating activities:
<S>                                                                                  <C>                  <C>
    Net income (loss)                                                                $(2,183,040)         $  12,238

    Adjustments to reconcile net income (loss) to net cash
        provided by (used in) operating activities:
            Depreciation                                                                  72,194              2,276
            Amortization of unearned compensation                                        143,937                  -
            Amortization of Goodwill                                                      19,140                  -
            Stock options issued for compensation                                          8,046                  -
            Loss on sale of securities                                                   112,710
            Changes in assets and liabilities:                                                                    -
                Accounts receivable                                                      (36,841)                 -
                Inventory                                                                171,489                  -
                Accounts payable                                                         218,144                  -
                Accrued expenses                                                          76,483              5,000
                Income taxes payable                                                      (2,160)             1,081
                Other, net                                                               (94,025)             2,160
                        Net cash provided by (used in)                                ----------           --------
                            operating activities                                      (1,493,923)            22,755
                                                                                      ----------           --------

Investing activities:
    Purchase of securities                                                            (3,247,091)                 -
    Proceeds from sale of securities                                                   3,134,381                  -
    Cash received from Rotman Auction, Inc. acquisition                                    9,864
    Cash received from Securities Resolutions Advisors, Inc. acquisition                     488
    Property and equipment acquisitions                                                 (633,506)           (22,755)
                                                                                      ----------           --------
                        Net cash used in investing activities                           (735,864)           (22,755)
                                                                                      ----------           --------
Financing activities:
    Proceeds from assignment of common stock call options                              2,450,000                  -
    Proceeds from stock subscriptions                                                      1,000                  -
                        Net cash provided by (used in)                                 ---------           --------
                            financing activities                                       2,451,000                  -
                                                                                       ---------           --------
Net increase in cash                                                                     221,213                  -

Cash - beginning                                                                               -                  -
                                                                                       ---------           --------
Cash - ending                                                                         $  221,213          $       -
                                                                                       =========           ========

</TABLE>

See accompanying notes to financial statements.

                                       F-7

<PAGE>


                            SALES ONLINE DIRECT, INC.

                      STATEMENTS OF CASH FLOWS (continued)

                     Years Ended December 31, 1999 and 1998

               Supplemental disclosures of cash flow information:

Cash paid during the period for:

                                                          1999              1998
                                                          ----              ----


Income taxes                                             $2,432         $     --


      Supplemental Schedule of Non-cash Investing and Financing Activities


                                                           1999            1998
                                                           ----            ----

         Contributions of inventories (Note 2)         $769,764          $    --

Contribution  of the net  assets of World  Wide  Collectors  Digest,  Inc.  were
recorded at their fair values as follows:

         Due from shareholder                          $  2,737          $    --
         Other current assets                          $  1,000          $    --
         Property and equipment                        $ 29,877          $    --
         Liabilities assumed                           $   (385)         $    --
         Paid in capital                               $ 33,229          $    --

Merger of Rotman Auction, Inc. accounted for utilizing
the purchase method of accounting.  The assets were recorded at
their fair values as follows:

         Cash received in the transaction              $   9,864         $    --
         Accounts receivable                           $  11,841         $    --
         Merchandise inventories                       $  31,454         $    --
         Due from affiliate                            $  10,919         $    --
         Other current assets                          $   7,115         $    --
         Property and equipment                        $   1,697         $    --
         Due to Shareholder                            $ (11,820)        $    --
         Other liabilities assumed                     $(129,975)        $    --
         Goodwill                                      $  68,905         $    --


Common stock subscribed                                $      --         $ 1,000


See accompanying notes to financial statements.

                                      F-8
<PAGE>

                            SALES ONLINE DIRECT, INC.

                          NOTES TO FINANCIAL STATEMENTS

                     Years Ended December 31, 1999 and 1998


1.    ORGANIZATION

      On February  25,  1999,  Securities  Resolution  Advisors,  Inc.  ("SRAD")
      purchased all of the outstanding  common stock of Internet  Auction,  Inc.
      ("Internet  Auction").  The  acquisition was made pursuant to an Agreement
      and Plan of  Reorganization  (the  "Agreement")  dated  January  31,  1999
      between  SRAD  and  the  principal  shareholders  ("IA  Shareholders")  of
      Internet  Auction.  Pursuant to the  Agreement,  SRAD  acquired all of the
      issued and outstanding  shares of the capital stock of Internet Auction in
      exchange  for the  issuance  to the IA  Shareholders  of an  aggregate  of
      37,368,912  shares,  representing  approximately 80%, of SRAD's issued and
      outstanding  common stock, and the business of Internet Auction became the
      business of SRAD. In accordance with the Agreement,  after the transaction
      described  above,  the IA  Shareholders  were appointed to SRAD's Board of
      Directors  and  became  officers  of  the  SRAD.  The  previously  serving
      directors resigned from the Board.

      SRAD  subsequently  changed its name to Sales  OnLine  Direct,  Inc.  (the
      "Company").

      For accounting purposes, the transaction described above is considered, in
      substance, a capital transaction rather than a business combination. It is
      equivalent to the issuance of common stock by Internet Auction for the net
      assets of the Company, accompanied by a recapitalization.  This accounting
      treatment  is  identical  to that  resulting  from a reverse  acquisition,
      except  that no  goodwill  or other  intangible  asset had been  recorded.
      Accordingly, the accompanying financial statements reflect the acquisition
      by   Internet   Auction  of  the  net  assets  of  the   Company  and  the
      recapitalization  of Internet Auction's common stock based on the exchange
      ratio in the Agreement.


2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      Basis of presentation

      Prior to the  transaction  described  above,  the  business  conducted  by
      Internet  Auction was through four related  companies:  Internet  Auction,
      Inc.,  Rotman  Auction,  Internet Collectibles and World  Wide  Collectors
      Digest, Inc.("WWCD"). In anticipation of the transaction with the Company,
      the companies were combined and their operations integrated as follows:

      Internet Auction, Inc. - A person-to-person  auction site offering sellers
      a vehicle for listing  items for sale and allows buyers to bid on items of
      interest.

      Rotman  Auction - A  full-service  auction  house  located  in  Worcester,
      Massachusetts.  The  Company  provides a full range of services to sellers
      and  buyers   including  live  online   bidding,   consignment   services,
      authentication  of merchandise,  digital  photography as well as purchases
      and sales of authentic memorabilia.

                                      F-9
<PAGE>

                            SALES ONLINE DIRECT, INC.

                    NOTES TO FINANCIAL STATEMENTS (Continued)


SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

      Internet  Collectibles  - A  wholesale  and retail  collectibles  division
      engaging in the business of buying, warehousing,  distribution,  marketing
      and selling  collectibles.  Internet  Collectibles  maintains inventory of
      memorabilia with popular and historical significance that allows customers
      to directly purchase the memorabilia  without the competition from bidders
      in an auction format.

      WWCD - An e-commerce  website for dealers in the  collectibles  community.
      WWCD is a  full-service  company that designs hosts and  maintains  dealer
      websites. WWCD's software allows clients to create online storefronts, set
      prices, and sell directly to online shoppers.

      Inventory Purchase Agreements

      On February 12, 1999, Internet Auction acquired  collectibles,  collectors
      items and memorabilia  from Rotman  Production,  a related party,  with an
      estimated fair value of approximately  $629,000 in exchange for 236 shares
      of the Internet  Auction's  common stock  received from a  stockholder  of
      Internet  Auction.  In  addition,  the  Seller was  assigned  the right to
      acquire  700,000 option shares of SRAD common stock from Universal at $.50
      per share. See Note 4.

      On February 25, 1999, Internet Auction acquired  collectibles,  collectors
      items and memorabilia from Kim Stengel, a related party, with an estimated
      value of approximately $140,000 in exchange for 236 shares of the Internet
      Auction's common stock received from a stockholder of Internet Auction.

      Purchase of Assets of WorldWide Collectors Digest, Inc. (WWCD)

      On February  25,  1999,  Internet  Auction  acquired the assets of WWCD, a
      related  party,  with an  estimated  value  of  approximately  $34,000  in
      exchange for 3,835 shares of Internet Auction's common stock received from
      a stockholder of Internet Auction.

      Merger with Rotman Auction, Inc.

      Effective February 25, 1999,  Internet Auction merged with Rotman Auction,
      Inc. ("Rotman"), a related party. Under the terms of the merger agreement,
      the  shareholder of Rotman  received 870 shares of the Internet  Auction's
      common stock in exchange for the Rotman  shares owned by the  shareholder.
      Internet Auction was the surviving  corporation in the merger.  The merger
      was recorded using the purchase  method of  accounting.  The operations of
      Rotman are included in the financial  statements  from the date of merger.
      In connection with the acquisition, the Company recognized goodwill in the
      amount of $68,905. Amortization of goodwill for 1999 amounted to $19,140.

      Cash and cash equivalents

      The Company  considers all highly  liquid  investments  purchased  with an
      original maturity of three months or less to be cash equivalents.

                                      F-10
<PAGE>

                            SALES ONLINE DIRECT, INC.

                    NOTES TO FINANCIAL STATEMENTS (Continued)


SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

      Inventory

      Inventory  consists of collectible  merchandise  for sale and is stated at
      the  lower of  average  cost or  market on a  first-in,  first-out  (FIFO)
      method.

      Property and Equipment

      Property and equipment are stated at cost.  Depreciation is computed using
      the double  declining  balance method over the estimated  useful life of 5
      years.  Leasehold improvements are amortized on a straight-line basis over
      the shorter of the  estimated  useful life of the asset or the life of the
      related lease.

      Goodwill

      Goodwill is being  amortized  on a  straight-line  basis over an estimated
      useful life of three years.

      Revenue Recognition

      The Company generates revenue on sales of its purchased inventory and from
      fees and  commissions  on  sales of  merchandise  under  consignment  type
      arrangements.

      For sales of merchandise owned and warehoused by the Company,  the Company
      is responsible for conducting the auction, billing the customer,  shipping
      the  merchandise  to the  customer,  processing  merchandise  returns  and
      collecting  accounts  receivable.  The Company  recognizes the gross sales
      amount as revenue upon  verification  of the credit card  transaction  and
      shipment of the merchandise.

      For sales of merchandise under consignment-type  arrangements, the Company
      takes physical possession of the merchandise,  but is not obligated to and
      does not take title to or ownership of the merchandise. When an auction is
      completed,  consigned  merchandise  which  has been sold is  shipped  upon
      receipt of payment.  The Company recognizes the net commission and service
      revenues  relating to the consigned  merchandise upon receipt of the gross
      sales  proceeds.  The Company then releases the net sales  proceeds to the
      Consignor.

      Advertising Costs

      Advertising costs are charged to operations when incurred.

                                      F-11
<PAGE>

                            SALES ONLINE DIRECT, INC.

                    NOTES TO FINANCIAL STATEMENTS (Continued)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

      Income Taxes

      Deferred tax asset and liabilities are recorded for temporary  differences
      between the financial  statement  and tax bases of assets and  liabilities
      using the enacted income tax rates expected to be in effect when the taxes
      are actually paid or recovered.  A deferred tax asset is also recorded for
      net  operating  loss,  capital loss and tax credit  carry  forwards to the
      extent their realization is more likely than not. The deferred tax expense
      for the  period  represents  the  change  in the  deferred  tax  asset  or
      liability from the beginning to the end of the period.

      Use of Estimates

      In preparing  financial  statements in conformity with generally  accepted
      accounting  principles,  management  is  required  to make  estimates  and
      assumptions  that affect the amounts reported of assets and liabilities as
      of the date of the  balance  sheet and  reported  amounts of  revenue  and
      expenses  during  the  reporting  period.   Material  estimates  that  are
      particularly  susceptible to significant change in the near term relate to
      the  inventory  valuation and the deferred tax asset  valuation.  Although
      these estimates are based on management's  knowledge of current events and
      actions, they may ultimately differ from actual results.

      Stock Compensation Plans

      Statement of Financial  Accounting Standards ("SFAS") No. 123, "Accounting
      for  Stock-Based  Compensation,"  encourages  all entities to adopt a fair
      value based method of accounting  for employee stock  compensation  plans,
      whereby compensation cost is measured at the grant date based on the value
      of the award and is recognized over the service  period,  which is usually
      the  vesting  period.  However,  it also  allows an entity to  continue to
      measure  compensation cost for those plans using the intrinsic value based
      method of accounting prescribed by Accounting Principles Board Opinion No.
      25, "Accounting for Stock Issued to Employees," whereby  compensation cost
      is the  excess,  if any,  of the quoted  market  price of the stock at the
      grant date (or other  measurement  date) over the amount an employee  must
      pay to acquire the stock.  Stock options issued under the Company's  stock
      option plan typically have no intrinsic value at the grant date, and under
      Opinion No. 25 no  compensation  cost is recognized  for them. The Company
      has elected to continue with the accounting  methodology in Opinion No. 25
      and, as a result,  has  provided pro forma  disclosures  of net income and
      earnings  per share  and other  disclosures,  as if the fair  value  based
      method of accounting had been applied.  The pro forma disclosures  include
      the effects of all awards granted  during 1999.  There were no outstanding
      options at December 31, 1999. (See Note 4.)

                                      F-12
<PAGE>

                           SALES ONLINE DIRECT, INC.

                    NOTES TO FINANCIAL STATEMENTS (Continued)


SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Concluded)

      Earnings Per Common Share

      Basic   earnings  per  share   represents   income   available  to  common
      stockholders  divided  by the  weighted-average  number of  common  shares
      outstanding  during  the  period.  Diluted  earnings  per  share  reflects
      additional  common  shares  that would have been  outstanding  if dilutive
      potential  common  shares had been issued,  as well as any  adjustment  to
      income  that would  result  from the assumed  issuance.  Potential  common
      shares  that may be issued by the  Company  relate  solely to  outstanding
      stock options,  and are determined using the treasury stock method.  Stock
      options have been excluded from the  computation  of diluted  earnings per
      share  because they were antidilutive as a result of the  Company's  net
      loss for the year.

      Recent Accounting Pronouncements

      The Financial  Accounting  Standards  Board ("FASB") has issued a proposed
      interpretive  release,  Stock  Compensation-Interpretation  of  Opinion 25
      ("Interpretation"). The Interpretation will provide accounting guidance on
      several  issues   that  are  not  specifically   addressed  in  Accounting
      Principles  Board  ("APB")  No.  25,   "Accounting  for  Stock  Issued  to
      Employees".  Of the many questions  addressed in the  Interpretation,  the
      most  significant  are a  clarification  of the  definition  of  the  term
      "employee"  for  purposes of applying the opinion and the  accounting  for
      options that have been repriced.

      The  Interpretation  is generally  effective  beginning  July 1, 2000. The
      Interpretation  applies  prospectively  at that date for  repricings  that
      occurred after December 15, 1998. It also applies  prospectively on July 1
      to new awards granted after December 15, 1998 for purposes of applying the
      definition of "employee".

      In  December   1999,  the   Securities   and  Exchange   Commission   (the
      "Commission")   published  Staff  Accounting  Bulletin  ("SAB")  No.  101,
      "Revenue  Recognition",  which  provides  guidance for applying  generally
      accepted principles to revenue  recognition in financial  statements filed
      with  the  Commission,   including  income   statement   presentation  and
      disclosure.  As originally issued, SAB 101 was to be applied no later than
      the first quarter of the fiscal year  beginning  after  December 15, 1999.
      However,  the  Commission  has delayed the  effective  date of the SAB for
      companies with fiscal years beginning  between December 16, 1999 and March
      15, 2000. For such entities, the mandatory  implementation date may now be
      no later  than the  second  quarter of the  fiscal  year  beginning  after
      December 15, 1999.

      The Company is in the process of  reviewing  the  pronouncements  detailed
      above to determine the impact on the Company.


3.    PROPERTY AND EQUIPMENT

      Property and  equipment at  December  31, 1999 consisted of the following:


                                                                1999
                                                                ----
          Computer equipment and software                    $518,434
          Office Furniture                                     56,075
          Leasehold Improvements                               54,995
          Purchased software                                   70,000
                                                             --------
                                                              699,504
          Accumulated depreciation                            (86,139)
                                                             --------
                                                             $613,365
                                                             ========

      Depreciation  and  amortization  expense of property and equipment for the
      years ended  December 31, 1999 and December 31, 1998  amounted to $ 72,194
      and $ 2,276, respectively.

                                      F-13

<PAGE>

                           SALES ONLINE DIRECT, INC.

                    NOTES TO FINANCIAL STATEMENTS (Continued)


PROPERTY AND EQUIPMENT (Continued)

      The  Company  leases its  technology  location  under an  operating  lease
      commencing  on January 1, 2000 and  expiring on  December  31,  2004.  The
      Company also leases  offices and warehouse  facilities  for  approximately
      $2,500 per month on a tenant-at-will basis.

      The  following  is a schedule of future  minimum  lease  payments  for the
      operating lease in effect at December 31, 1999:

                    Year             Amount
                    ----             ------

                    2000             $ 89,936
                    2001               89,936
                    2002               89,936
                    2003               91,980
                    2004               94,024
                                      -------
                                     $455,812
                                     ========

      Rent expense for the year ended December 31, 1999 amounted to $29,265.


4.    COMMON STOCK

      Call Option Agreement

      In  connection  with the  agreement  described  in Note 1, on February 25,
      1999, SRAD entered into a Call Option Agreement ("Option  Agreement") with
      Universal  Funding,  Inc.  (Universal),   a  shareholder  of  SRAD  and  a
      beneficial  owner of 3,000,000  shares of SRAD's common  stock.  Under the
      Agreement,  Universal  agreed to grant certain  options to SRAD to acquire
      2,000,000  shares of SRAD's common stock owned by  Universal.  The options
      consist of 1,000,000 shares at $.50 per share exercisable through February
      25,  2000 and  1,000,000  shares  at $.75 per  share  exercisable  through
      February  25,  2001.  The  exercise  price was  reduced  to .375 per share
      through April 30, 1999.

      In addition,  the Company  assigned  options to purchase 160,000 shares of
      stock from Universal to Richard Singer,  the former President of SRAD, for
      services  rendered to SRAD in connection  with the acquisition of Internet
      Auction,  Inc.  Also,  the Company  assigned  options to purchase  700,000
      shares of stock from  Universal  in  connection  with the  acquisition  of
      certain inventories. See Note 2.

      In April 1999, the Company  assigned options to purchase 500,000 shares of
      stock from Universal to certain  individuals  in exchange for  $2,450,000,
      which was added to the paid-in capital of the Company.

      At  December  31,  1999,  the  Company  had a balance  of  640,000  shares
      remaining  under  the  agreement  with an  exercise  price  of $.75 and an
      expiration date of February 25, 2001.



                                      F-14

<PAGE>

                            SALES ONLINE DIRECT, INC.

                    NOTES TO FINANCIAL STATEMENTS (Continued)


  COMMON STOCK (continued)

      Stock Options

      In June 1999,  the  Company's  Board of  Directors  adopted the 1999 Stock
      Option Plan (the "1999 Plan")  which  provided for the issuance of options
      to  directors,  officers,  employees  and  consultants  of the  Company to
      purchase up to 1,000,000  shares of the Company's  common  stock.  Options
      granted under the plan may be either  incentive  stock options  ("ISO") or
      nonqualified stock options ("NSO").

      The 1999 Plan provides  that each option be granted at a price  determined
      by the Board of  Directors  on the date such  option is granted and have a
      maximum option term of ten years.  The options granted become  exercisable
      during a period of time as specified by the Board of Directors at the date
      such option is granted.

      In July 1999,  the  Company  granted an option to an  employee to purchase
      471,000  shares  of  common  stock  at  $.01  per  share.  The  option  is
      exercisable  over  a  four-year  period.  The  Company  recorded  unearned
      compensation of $757,848,  based on the difference between the fair market
      value of the common  stock at the grant date and the exercise  price.  The
      unearned  compensation  is being  amortized over the vesting period of the
      option.  Amortization expense related to unearned compensation amounted to
      $143,937 for the year ended December 31, 1999.

      An analysis of the activity in the 1999 Plan is as follows:

                                                               Weighted
                                                               Average
                                                               Exercise
                                                 Shares        Price
                                                 ------        -----

           Shares under option:
             Outstanding at beginning of year          -        $   -

           Granted                               597,000         0.33
           Exercised                                   -            -
           Expired/Cancelled                     (18,000)        1.63
                                                 -------

           Outstanding at end of year            579,000        $0.29
                                                 =======
           Options exercisable at year end        94,750

           Weighted average fair value of
             options granted during the year       $1.62        $0.01

                                      F-15
<PAGE>

                            SALES ONLINE DIRECT, INC.

                    NOTES TO FINANCIAL STATEMENTS (Continued)



      COMMON STOCK (continued)

      Stock Options (continued)


      Information  pertaining to options  outstanding at December 31, 1999 is as
      follows:

                          Options Outstanding               Options Exercisable
                          -------------------               -------------------

                                  Weighted
                                  Average      Weighted                 Weighted
                                 Remaining      Average                 Average
    Range of          Number     Contractual    Exercise      Number    Exercise
 Exercise Prices   Outstanding     Life        Price      Exercisable    Price
 ---------------   -----------     ----        -----      -----------    -----

      $ .01         471,000       9 years     $  0.010       89,125     $0.010
        .812         14,000       9              0.812          125      0.812
       1.625         94,000       9              1.625        5,500      1,625
                    -------                                  ------

Outstanding at end
 of year            579,000                   $  0.330       94,750     $0.010
                    =======                                  ======


      During July 1999,  the Company's  Board of Directors  adopted,  subject to
      stockholders'  approval,  the 1999 Omnibus Share Plan (the "Omnibus Plan")
      which provides for both incentive and non-qualified  stock options,  stock
      appreciation rights and other awards to directors,  officers and employees
      of the  Company  to  purchase  or receive  up to  1,000,000  shares of the
      Company's  stock.  A  committee  of the Board of  Directors  ("Committee")
      establishes  the option  price at the time each option is  granted,  which
      price may, in the  discretion of the  Committee,  be less than 100% of the
      fair  market  value of the  shares on the date of the grant.  The  options
      granted  will  have a maximum  term of ten years and shall be  exercisable
      during a period as  specified  by the  Committee.  There were no incentive
      options granted under the Omnibus Plan during 1999.

      The Company applies Accounting Principles Board Opinion No. 25 and related
      interpretations  in accounting  for its stock option  plans.  Accordingly,
      compensation  cost has been recognized only to the extent described above.
      Had compensation  cost for the Company's stock option plan been determined
      based on the fair  value at the  grant  dates  for  awards  under the plan
      consistent  with the method  prescribed  by FASB  Statement  No. 123,  the
      Company's  net income and earnings  per share would have been  adjusted to
      the pro forma amounts indicated below:

                                                  Years Ended December 31,
                                                  ------------------------
                                                  1999               1998
                                                  ----               ----
Net income(loss)      As reported             $(2,183,040)        $ 12,238
                      Pro forma               $(2,197,613)            N/A

Basic loss per share  As reported             $     (0.05)            N/A
                      Pro forma               $     (0.05)            N/A

                                      F-16

<PAGE>

                            SALES ONLINE DIRECT, INC.

                    NOTES TO FINANCIAL STATEMENTS (Continued)


      COMMON STOCK (concluded)

      Stock Options (concluded)

      The fair  value of each  option  grant is  estimated  on the date of grant
      using  the   Black-Scholes   option-pricing   model  with  the   following
      weighted-average assumptions:

                                              Years Ended December 31,
                                              ------------------------
                                               1999             1998
                                               ----             ----

      Expected life                          4 years            N/A
      Risk-free interest rate                  6.0%             N/A
      Dividend yield                           None             N/A
      Volatility                               254%             N/A


5.    INCOME TAXES

      There was no provision  for income taxes for the years ended  December 31,
      1999 due to the  Company's net  operating  loss and its valuation  reserve
      against deferred income taxes.

      The  difference  between  the  provision  for income  taxes  from  amounts
      computed by applying the statutory  federal income tax rate of 34% and the
      Company's  effective tax rate is due  primarily to the net operating  loss
      incurred by the Company and the  valuation  reserve  against the Company's
      deferred tax asset.

      The tax effects of temporary  differences and carryforwards that give rise
      to deferred taxes are:

      Federal net operating loss carryforwards                  $ 625,000
      State net operating loss carryforwards                      195,000
      Stock-based compensation recognized for
           financial statement purposes                            60,000
                                                                   ------
                                                                  880,000
      Valuation reserve                                          (880,000)
                                                                 --------
      Net deferred tax asset                                    $       -
                                                                =========


      The  valuation  reserve  applicable to net deferred tax asset for the year
      ended  December 31, 1999 is due to the  likelihood of the deferred tax not
      expected to be utilized.

      At December 31, 1999, the Company has federal and state net operating loss
      carryforwards  of  approximately  $2,200,000  available  to offset  future
      taxable income which will expire in 2019.

                                      F-17
<PAGE>

                            SALES ONLINE DIRECT, INC.

                    NOTES TO FINANCIAL STATEMENTS (Continued)

6.    RELATED PARTY TRANSACTION

      During September 1999, the Company  purchased  certain computer  equipment
      and internet research  technology and coding material from Timeline,  Inc.
      ("Timeline")  in the amount of $70,000.  Timeline is a related party as it
      is owned by certain officers of the Company.


7.    SUBSEQUENT EVENTS

      Convertible Debt Financing

      On  March  23,  2000,  the  Company  entered  into a  Securities  Purchase
      Agreement  (the  "Agreement"),  whereby the Company sold an 8% convertible
      note in the amount of  $3,000,000,  due March 31, 2002 to Augustine  Fund,
      L.P. (the "Buyer").

      The note is convertible  into common stock at a conversion  price equal to
      the lesser of: (1) one  hundred  ten  percent  (110%) of the lowest of the
      closing bid price for the common stock for the five (5) trading days prior
      to March 23, 2000, or (2) seventy-five percent (75%) of the average of the
      closing  bid price for the  common  stock  for the five (5)  trading  days
      immediately preceding the conversion date.

      Had the Buyer  converted the note on March 23, 2000,  the Buyer would have
      received  $4,000,000 in aggregate value of the company's common stock upon
      the  conversion  of the  $3,000,000  convertible  note.  As a result,  the
      intrinsic value of the beneficial  conversion  feature of $ 1,000,000 will
      be allocated to debt discount and additional  paid-in  capital.  Since the
      debt is convertible at date of issuance, the debt discount will be charged
      to earnings at that time.

      In connection with the Agreement,  the Company also issued warrants to the
      Buyer and Delano Group  Securities to purchase  300,000 and 100,000 shares
      of common  stock,  respectively.  The  purchase  price per share of common
      stock is equal to one hundred and twenty  percent  (120%) of the lowest of
      the  closing bid prices for the common  stock  during the five (5) trading
      days prior to the closing date. The warrants expire on March 31, 2005.

      In addition,  the Company  entered into a Registration  Rights  Agreement,
      whereby  the  Company  agreed to file a  Registration  Statement  with the
      Securities and Exchange  Commission (SEC),  within 180 days of the closing
      date,  covering the common stock to be issued upon the  conversion  of the
      convertible note and stock purchase warrants.

                                      F-18

<PAGE>

                            SALES ONLINE DIRECT, INC.

                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Concluded)

      SUBSEQUENT EVENTS (concluded)

      Convertible Debt Financing (concluded)

      If the Registration  Statement is not declared  effective by the SEC on or
      before  September  30, 2000,  then with respect to any portion of the note
      not  previously  converted into common stock,  the  applicable  conversion
      percentage  will decrease by two percent (2%) each thirty day period until
      the  Registration  Statement is declared  effective by the SEC. If the SEC
      has not  declared the  Registration  Statement  effective  within one year
      after March 23, 2000, the applicable  conversion percentage shall be fifty
      percent (50%).

      Also,  if the  Registration  Statement is not filed by the filing date and
      not declared  effective by the SEC on or prior to September 30, 2000,  the
      Company  shall pay cash, as  liquidating  damages,  for such failure.  The
      required  payment will be equal to two (2%) of the  purchase  price of the
      note and  warrant  for each  thirty-day  period,  until the  breach of the
      Registration Rights Agreement is cured.

      All fees and expenses related to the registration of the common stock will
      be paid by the Company.

      Issuance of Common Stock

      On February 17, 2000, the Company issued 75,000 shares of its common stock
      to Universal  Funding,  Inc. for payment of certain fees due in connection
      with the granting of the common stock call options and temporary reduction
      of the call option exercise price. In addition,  the Company issued 35,000
      shares  of its  common  stock  to an  investment  consultant  for  service
      rendered in  connection with  the common stock  option grant transactions.
      Also,  the Company  issued  35,000  shares to a  consultant  for  services
      rendered in the first quarter of 2000.

      The value of the  common  shares  at the date of  issuance  of the  shares
      described above was $1.28 per share.

      Assignment of Stock Options

      In March  2000,  the Company  assigned to an investor  options to purchase
      42,500  shares of the  Company's  common  stock  from  Universal.  The net
      proceeds to the Company were approximately $21,000.

      Business Acquisition

      On March  7,  2000,  the  Company  acquired  Internet  Collectible  Awards
      (www.collectiblenet.com),  an internet  business that polls  consumers and
      reports  on the best  Internet  collectibles  Web  sites in a  variety  of
      categories. As consideration for the acquisition, the Company paid $50,000
      cash and issued  200,000  shares of the  Company's  common stock valued at
      $237,500 (based on the Company's stock price at the date of  acquisition).
      The  acquisition  will be  accounted  for  under  the  purchase  method of
      accounting.

                                      F-19



<PAGE>



                                  EXHIBIT INDEX

         Exhibit           Description of Exhibits
           No.             -----------------------
         -------
          2.1    Agreement and  Plan of  Reorganization  dated January 31, 1999
                 among the  Company and Gregory Rotman,  Richard  Rotman,  Marc
                 Stengel and  Hannah  Kramer.  (Incorporated  by reference from
                 Form 8-K - File No. 0-28720, filed on March 10, 1999.)

          3.1    Certificate of Incorporation, as amended *

          3.2    Amended and Restated Bylaws *


         10.1    Lease Agreement, dated July 26, 1999 between 100 Painters Mill,
                 LLC  and  the  Company  and First Amendment to Lease Agreement,
                 dated December 31, 1999*

         10.2    Securities Purchase Agreement dated March 23, 2000 between the
                 Company  and  Augustine  Fund, LP. *

         10.3    Convertible Note dated March 23, 2000 issued to Augustine Fund,
                 LP pursuant to Securities Purchase Agreement *

         10.4    Warrant  dated  March 23,  2000  issued to  Augustine  Fund,
                 LP pursuant to Securities Purchase Agreement.

         10.5    Registration Rights Agreement dated March 23, 2000 between the
                 Company and Augustine Fund, LP pursuant to Securities Purchase
                 Agreement *

         10.6    Escrow  Agreement  dated  March 23,  2000  among  the  Company,
                 Augustine  Fund,  LP and H.  Glenn  Bagwell,  Jr.  pursuant  to
                 Securities Purchase Agreement *

         10.7    Warrant  dated  March 23,  2000  issued by the Company to Delan
                 Group Securities, LLC *

         16.1    Letter from Guest & Company on change in certifying accountant
                 (incorporated by reference from Form 8-K, filed on April 29,
                 1999)

         16.2    Letter from Stephen P. Higgins,  C.P.A. on change in certifying
                 accountants  (incorporated by reference from Form 8-K/A,  filed
                 on March 31, 2000)

         21.1    Subsidiaries of the Company (included in Item I)*

         27.1    Financial Data Schedule *

         99.1    Risk Factors *
---------------
* filed herewith

                                       E-1
<PAGE>